Speculation is growing that the US Federal Reserve will announce a third successive rate increase of three-quarters of a percentage point following a blockbuster US jobs report last week

London (AFP) - Stock markets rose and the dollar retreated Monday as investors turned their attention to US inflation data later this week and weigh the prospect of further monetary policy tightening.

The dollar was weaker as investors took profit on the strong gains notched up last week on speculation that the US Federal Reserve will announce a third successive rate increase of three-quarters of a percentage point in September.

“The macro calendar is quiet this week with US inflation data being the main highlight,” said Forex.com analyst Fawad Razaqzada.

“This will keep the dollar… in focus after a very strong US jobs report on Friday rekindled the possibility of a hat trick of 75-basis-point rate hikes in September.”

Data due Wednesday are expected to show inflation in the world’s biggest economy slowed slightly in July, but remained close to the four-decade highs seen in recent months.

The reading “seems very unlikely to offer compelling evidence of a slowdown needed for the Fed to pull away from its aggressive inflation-fighting mode”, said SPI Asset Management analyst Stephen Innes.

Oil prices gained, making good some of the losses from last week, when a rise in US crude stockpiles was partly responsible for a 10-percent drop in prices.

Both main oil contracts have lost all the gains seen in the wake of Russia’s invasion of Ukraine, which led the United States and Europe to ban imports of Russian crude, hammering already thin supplies.

A blockbuster US jobs report last week “highlighted how strong the economy remains although traders are now increasingly nervous about more aggressive tightening sending the economy into a deeper recession further down the road”, said OANDA analyst Craig Erlam.

“The resumption of Iran nuclear talks today is one potential downside risk for the oil price, given the ability of the country to quickly ramp up production if a deal is struck.”

Iran on Sunday demanded that the UN nuclear watchdog, the International Atomic Energy Agency, “completely” resolve outstanding issues, as talks resume to revive a 2015 deal to rein in Tehran’s nuclear ambitions.

Iranian sources have suggested that one of the key sticking points is a probe by the IAEA into traces of nuclear material found at undeclared Iranian sites.

- Key figures at around 1540 GMT -

New York - Dow: UP 0.3 percent at 32,891.96 points

London - FTSE 100: UP 0.6 percent at 7,482.37 (close)

Frankfurt - DAX: UP 0.8 percent at 13,687.69 (close)

Paris - CAC 40: UP 0.8 percent at 6,524.44 (close)

EURO STOXX 50: UP 0.9 percent at 3,757.22

Tokyo - Nikkei 225: UP 0.3 percent at 28,249.24 (close)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 20,045.77 (close)

Shanghai - Composite: UP 0.3 percent at 3,236.93 (close)

Euro/dollar: UP at $1.0210 from $1.0184 Friday

Pound/dollar: UP at $1.2097 from $1.2075

Euro/pound: UP at 84.41 pence from 84.32 pence

Dollar/yen: DOWN at 134.75 yen from 135.00 yen

West Texas Intermediate: UP 0.9 percent at $89.81 per barrel

Brent North Sea crude: UP 1.0 percent at $95.90 per barrel