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 largely rose and oil prices retreated Monday as investors mulled the prospect of recession in the United States and elsewhere and central banks seek to tame soaring inflation with aggressive interest rate hikes.

The dollar, which had surged on Friday on the prospect of further large increases in US borrowing costs, fell back on profit-taking at the start of the new week.

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.

This week, all eyes will turn to the release of US July inflation data, which are expected to show a slight slowdown, but still not far from the four-decade highs seen in recent months.

The latest 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 retreated further on expectations of weaker demand amid a cost-of-living crisis.

A rise in US crude stockpiles was partly responsible for a 10-percent drop in prices last week.

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.

The 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 1100 GMT -

London - FTSE 100: UP 0.5 percent at 7,479.12 points

Frankfurt - DAX: UP 0.7 percent at 13,674.28

Paris - CAC 40: UP 0.9 percent at 6,533.50

EURO STOXX 50: UP 0.9 percent at 3,759.44

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)

New York - Dow: UP 0.2 percent at 32,803.47 (close)

Euro/dollar: UP at $1.0194 from $1.0184 Friday

Pound/dollar: UP at $1.2104 from $1.2075

Euro/pound: DOWN at 84.20 pence from 84.32 pence

Dollar/yen: DOWN at 134.86 yen from 135.00 yen

West Texas Intermediate: DOWN 1.0 percent at $88.09 per barrel

Brent North Sea crude: DOWN 1.1 percent at $93.88 per barrel