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European stock markets wavered on Wednesday but London climbed and the pound sank as news of sharply slowing inflation stoked hopes of a Bank of England interest rate cut.
Paris advanced but Frankfurt fell in early afternoon eurozone deals.
London's benchmark FTSE 100 shares index was jolted higher by official data showing that Britain's Consumer Prices Index (CPI) inflation slowed in November to 3.9 percent, which was the lowest rate since September 2021.
That sparked speculation the Bank of England could now decide to start cutting borrowing costs next year, having lifted them to a 15-year peak of 5.25 percent in order to bring down inflation from double digits.
However, concerns persist after core inflation -- which strips out food and energy costs -- eased only slightly to stand at 5.2 percent in November.
"The FTSE 100 has enjoyed a welcome boost, with markets reacting to a surprise slump in UK CPI that lifted expectations for a May rate cut from the BoE," said Scope Markets analyst Joshua Mahony.
"The optimism seen in the UK has brought only moderate benefits for mainland European indices, with early upside being eradicated in part thanks to a concerning Ifo update that German companies continue to plan a fresh round of price hikes going forward."
Elsewhere, Asian stocks mostly rallied after another record Wall Street performance as traders bet on the US Federal Reserve slashing interest rates several times next year.
The advances come even as central bank officials try to push back against expectations, which have set markets up for a healthy end-of-year rally.
The next key event this week will be the release of the US personal consumption expenditures (PCE) price index, which is the Fed's preferred gauge of inflation.
The reading's fall in recent months, along with consumer prices and a slowing jobs market, has been among the main reasons Fed decision-makers are feeling confident that they are on the right track.
Still, they are trying to prevent investors getting ahead of themselves by tempering expectations.
Oil prices extended their recent rally, which was fuelled by companies suspending transit via the Red Sea owing to attacks on cargo ships by Yemen's Iran-backed Huthi rebels in solidarity with Gaza.
- Key figures around 1200 GMT -
London - FTSE 100: UP 0.6 percent at 7,682.21 points
Paris - CAC 40: UP 0.1 percent at 7,579.63
Frankfurt - DAX: DOWN 0.1 percent at 16,735.17
EURO STOXX 50: DOWN 0.1 percent at 4,529.72
Tokyo - Nikkei 225: UP 1.4 percent at 33,675.94 (close)
Hong Kong - Hang Seng Index: UP 0.7 percent at 16,613.81 (close)
Shanghai - Composite: DOWN 1.0 percent at 2,902.11 (close)
New York - Dow: UP 0.7 percent at 37,557.92 (close)
Euro/dollar: DOWN at $1.0937 from $1.0981 on Tuesday
Dollar/yen: DOWN at 143.39 yen from 143.84 yen
Pound/dollar: DOWN at $1.2647 from $1.2732
Euro/pound: UP at 86.49 pence from 86.24 pence
West Texas Intermediate: UP 1.3 percent at $74.93 per barrel
Brent North Sea crude: UP 1.2 percent at $80.20 per barrel
S.Rocha--TFWP