Europe's stock markets, the dollar and oil have all had a spring back in their step as a deflationary jolt from China made way for broader optimism ahead of what was set to be the Bank of England's 12th straight rate rise.

Hopes that the US Federal Reserve's aggressive hiking cycle might be over at least were still feeding through following inflation data there on Wednesday, with the pan-European STOXX 600 index up 0.5 per cent and key borrowing costs inching down.

Sterling was seeing some profit-taking after it had hit a one-year high and with the Bank of England poised to crank UK borrowing costs up another quarter point to 4.5 per cent at 1100 GMT.

"We think BoE rates will eventually get up to the 4.75 per cent-5.0 per cent level," said Vanguard senior economist Shaan Raithatha, citing Britain's stubbornly high inflation numbers, especially core inflation which has been stuck around 6.0 per cent.

"It feels like the BoE has been signalling since the end of last year that they are near the end (of the rate hike cycle) and want to pause, but inflation has remained sticky and the market has just continued to reprice expectations."

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan had finished down 0.3 per cent, reversing gains in the morning session, as concerns about weak demand in China weighed on sentiment.

China's April consumer prices data rose at a slower pace and missed expectations, while factory gate deflation deepened, suggesting more stimulus might be needed to boost a patchy post-COVID-19 economic recovery.

The consumer price index (CPI) in April rose 0.1 per cent year-on-year, the lowest rate since February 2021, while the producer price index (PPI) fell at the fastest clip since May 2020, declining 3.6 per cent year-on-year.

"Looking ahead, in year-over-year terms, we expect headline CPI inflation to accelerate modestly on continued economic recovery and PPI deflation to persist in the coming months," Goldman Sachs analysts said in a note.

Markets were also watching the start of three days of Group of Seven (G7) finance leaders meetings in Japan that will seek to draw supply chains away from China - but also try to get its co-operation in solving global debt problems.

Australian shares finished flat, as did Japan's Nikkei following a blitz of earnings and 16-month high earlier in the week.

China's blue-chip CSI300 index edged down 0.2 per cent, along with Hong Kong's Hang Seng.

"While both China's CPI and PPI data are lower than expected, the market's reaction to that is not very strong today," said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.

Investors don't expect further loosening of domestic liquidity in the near future."

With Wall Street futures pointing higher later, MSCI's main gauge of global stocks was pushing back into positive territory.

The US Labor Department's Consumer Price Index (CPI) had risen 4.9 per cent in April from a year ago, compared with analyst expectations of a 5.0 per cent increase.

The Nasdaq had touched its highest in more than eight months, having also been boosted by Alphabet's latest artificial intelligence plans, while the dollar was up 0.3 per cent against the major currencies and at a two-month high versus China's yuan.

Two-year Treasury yields, which typically move in step with rate expectations, inched up as far as 3.9265 per cent compared with a US close of 3.901 per cent.

But the benchmark 10-year Treasury notes were ticking down again as the euro zone's equivalent - Germany's 10-year bond yield - fell three basis points (bp) to 2.262 per cent, after a four bp fall on Wednesday.

In the commodity markets, oil prices rose for a fifth day in the past six as strong demand for fuel in the US outweighed the ongoing row about lifting the country's debt limit to prevent the world's biggest oil producer and consumer from defaulting on its debt.

US crude ticked up 0.87 per cent to $US73.19 ($A107.95) a barrel.

Brent crude rose to $US77.09 ($A113.70) per barrel, while gold hovered just below its recent record high at $US2,023 ($A2,984) per ounce.