LONDON: Stock markets climbed on Wednesday as data showed US inflation moderating in July, key data that could influence Federal Reserve discussions on whether to wind down its massive economic stimulus programme.

Equities have had a largely positive week after a recent run of pressure caused by the prospect of central banks tightening their monetary policies to tame soaring inflation, as well as by the fast-spreading Delta variant of the coronavirus.

But US government data showed that the consumer price index rose 0.5 percent month-on-month in July, slower than in June. It was at 5.4 percent on an annual comparison, the same as in June.

Central bank officials have insisted that the inflationary pressure was only temporary as the global economy recovers from a historic contraction last year.

"The key takeaway for the market is the moderation in the year-over-year readings, which feeds into the 'peak inflation' narrative," said Briefing.com analyst Patrick O'Hare.

"The stock market is taking some comfort in the notion that inflation pressures might not be as pronounced in coming months," he said.

O'Hare added, however, that "there is enough in the CPI report to spin the inflation narrative either way, so it wouldn't be a surprise to see another mixed day of trading".

News that US President Joe Biden's $1.2-trillion infrastructure spending bill had finally passed the Senate helped Wall Street hit new records on Tuesday, while Asian and European equities rose Wednesday.

The Dow was up 0.6 percent in Wednesday morning trading.

   **- Soft brake? -**

US July inflation data could have a bearing on the Fed's decision on when to start tapering the vast bond-buying programme that has been a major pillar of support for global markets since April last year.

Soaring prices in recent months and blockbuster jobs creation have ramped up pressure on the bank to tighten policy in order to prevent the economy from overheating.

With several officials indicating their support for a tightening before year's end, the question now is when -- not if -- it will move, leaving observers to suggest an interest rate hike as early as 2022.

"There seems to be acceptance that we are getting very close to that time, but investors know the Fed will not apply the brakes too harshly," said Fawad Razaqzada, analyst at ThinkMarkets.

World central bankers will meet later this month at an annual conference in Jackson Hole, Wyoming, where Fed Chair Jerome Powell will speak.

The dollar, meanwhile, was down against other major currencies after the inflation report's publication.

Oil prices fell as the United States warned that a production increase agreed by the world's leading crude producers at OPEC+ was "simply not enough".