Dollar weakens, stocks rise as consumer prices jump in Nov, data shows

The dollar weakened and a gauge of global equity markets edged higher on Friday after data showed consumer prices rose as expected in November, easing concerns the Federal Reserve would aggressively tighten monetary policy to combat inflation.

Gold gained as rising inflation lifted its safe-haven appeal, while U.S. Treasury yields were little changed in a sign some bond investors do not see interest rate hikes starting as early as next year's second quarter, as many equity investors do.

The U.S. consumer price index increased 0.8% last month after surging 0.9% in October, while it accelerated 6.8% on an annualized basis to mark the biggest year-on-year rise since June 1982.

The Fed's plans to taper bond purchases, likely to be announced next week when policymakers meet, is in line with what the U.S. central bank has indicated, said Brian Pietrangelo, managing director of Investment Strategy at Key Private Bank.

"The Fed's been pretty transparent, which is why you're seeing a positive move in the stock market today and not a lot of reaction in the bond market," he said, noting he expects two or three interest rate hikes next year.

"We believe the market can handle rate increases as long as they're transparent and they're at the right pace," he said.

MSCI's all-country world index advanced 0.10%, on track to post its biggest weekly gain since early February. But the broad STOXX Europe 600 index fell 0.30% on concerns the Omicron COVID-19 variant could weaken the economic recovery in Europe.

On Wall Street, the Dow Jones Industrial Average rose 0.41%, the S&P 500 advanced 0.67% and the Nasdaq Composite gained 0.38%.

Gains in information technology, led by Apple Inc, Microsoft Corp and Oracle Corp, pushed the S&P 500 and Nasdaq higher. But consumer staples was the biggest percentage gainer, up 1.8%, suggesting investors were carefully assessing the Fed's next move.

The dollar slid as the forex market was positioned for a higher CPI reading, analysts said.

"The FX market has been extremely long U.S. dollars for several months, so with this number coming in benign, we're almost out of events that could push the dollar materially higher before year-end," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.

The dollar index fell 0.149%, with the euro up 0.15% to $1.1309. The Japanese yen strengthened 0.09% versus the greenback at 113.35 per dollar.

The yield on 10-year U.S. Treasury notes rose 0.2 basis point to 1.489%.

Oil prices rose, on track for their biggest weekly gain since late August, with market sentiment buoyed by easing concerns over the Omicron variant's impact on global economic growth and fuel demand.

Brent crude rose 73 cents to settle at $75.15 a barrel. U.S. crude settled up 73 cents at $71.67 a barrel.

U.S. gold futures gained 0.4% at $1,784.30 an ounce.

(Reporting by Herbert Lash; additional reporting by Alun John in Hong Kong and Sujata Rao in London; editing by Barbara Lewis, Chris Reese and Dan Grebler)