GLOBAL MARKETS-Shares up as oil skids on hopes for Ukraine talks

By Wayne Cole

SYDNEY, March 14 (Reuters) - Most share markets firmed and oil slid on Monday on hopes for progress in Russian-Ukraine peace talks even as fighting continued to rage, while bond markets braced for rate rises in the United States and UK this week.

While Russian missiles hit a large Ukrainian base near the border with Poland on Sunday, both sides gave their most upbeat assessment yet of prospects for talks. nL3N2VG016nL2N2VG09X

Just the chance of peace saw S&P 500 stock futures ESc1 add 0.3%, while Nasdaq futures NQc1 rose 0.2%. EUROSTOXX 50 futures STXEc1 gained 0.9% and FTSE futures FFIc1 0.4%.

Tokyo's Nikkei .N225 rose 0.8%, but MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was dragged down 1.1% by losses in China.

Chinese blue chips .CSI300 shed 1.1% after a jump in coronavirus cases saw the southern city of Shenzen locked down and stoked speculation about more policy easing. nL2N2VG00Z

Bonds elsewhere remained under pressure having taken a beating last week as surging commodity prices looked set to boost inflation further, with yields on 10-year Treasuries rising three basis points to 2.03% US10YT=RR.

Notably, a key measure of U.S. inflation expectations climbed to 3% and near record highs US10YTIP=RR.

That merely cemented expectations the Federal Reserve would lift rates by 25 basis points at its policy meeting this week and signal more to come through members' "dot plot" forecasts.

"The dots will likely be mainly clustered around four or five hikes for 2022, up from three previously, given the stronger pace of inflation since the January FOMC meeting," said Kevin Cummins, chief U.S. economist at NatWest Markets.

"We suspect we could also get an addendum on how the Fed plans to reduce the size of the balance sheet as early as this week." FEDWATCH

The Bank of England is expected to lift its rates to 0.75% on Thursday, the third rise in a row, and to signal more with the market pricing an aggressive 2% by year end. nL5N2VD7HG

Fed fund futures 0#FF: imply no less than six or seven hikes this year to around 1.75%, keeping the U.S. dollar =USD underpinned near the highest since May 2020.

The euro was stuck at $1.0910 EUR=, and not far from its recent 22-month trough of $1.0804, while the dollar hit a fresh five-year peak on the yen at 117.82 JPY=.

The Bank of Japan is seen lagging far behind other major central banks in tightening policy.

"The yen has been unable to display its typical safe-haven attributes, partly because of the big rise in U.S. yields and the BoJ yield curve control policy that prevents JGBs following the move up in core global yields," said Rodrigo Catril, a senior FX strategist at NAB.

"Japan is also a big energy importer adding to concerns over a terms of trade shock from higher energy prices."

Gold lost some of its safe-haven charm on Monday, easing 0.6% to $1,973 an ounce XAU= and away for last week's peak at $2,069. GOL/

Likewise, the chance of progress on Ukraine saw oil prices surrender a little of their recent gains, even as talks with producer Iran seemed to be stalled. O/R nL2N2VG026

Brent LCOc1 was last quoted $3.12 lower at $109.55, while U.S. crude CLc1 fell $3.19 to $106.14.

(Reporting by Wayne Cole; Editing by Sam Holmes & Shri Navaratnam)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

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