(Updates ahead of Wall Street open, adds details on European

market rally)

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Euro, pound, Swiss franc all rise against the dollar

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European stocks climb to fresh record high

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GDP data shows UK avoids recession

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Oil close to lowest level of the year

By Marc Jones

LONDON, Feb 13 (Reuters) - Europe's main stock markets

and currencies rallied on Thursday on growing optimism about a

peace deal between Ukraine and Russia, and as bond buyers

overcame the latest wobble triggered by stubbornly high U.S.

inflation data.

Persisting trade war concerns kept gold close to an all-time

high after U.S. President Donald Trump reiterated his plans to

impose reciprocal tariffs on every country that has duties on

U.S. goods.

The euro's bounce left it at just above $1.04.

Trump held what he described as great talks with Russian

President Vladimir Putin and Ukraine's Volodymyr Zelenskiy on

Wednesday and said he saw a good possibility of ending the near

three-year-long war.

Bets that might also lead to an easing of Russian oil

sanctions saw Brent crude test its lows of the year and sent the

rouble on a 3% tear. Europe's record-high STOXX 600

added to its recent 8% surge too, although Wall

Street's S&P 500 and Nasdaq futures were a

fraction weaker.

ING currency strategist Chris Turner said a peace deal in

Ukraine could be an "important positive" for European countries

if it delivered lower energy prices and led to a Marshall

Plan-style rebuilding of Ukraine.

"The rally may have a little further to run," he added,

although the stiff headwinds of potential U.S. tariffs on Europe

and high U.S. rates "will limit the EUR/USD upside".

As well as a higher euro, the Swiss franc was up

against the dollar and Britain's pound rose 0.3% as

data showed the British economy saw unexpected modest pick-up at

the end of last year.

Overnight in Asia, Japan's Nikkei had gained 1.3%

thanks to a much weaker yen. MSCI's broadest index of

Asia-Pacific shares outside Japan rose as much

as 1.2% to hit its highest since early December.

Chinese blue chips saw a late dip to end their day

down 0.2%, as did Hong Kong's Hang Seng index after it

had hit another four-month high.

The bond markets were still digesting Wednesday's

January U.S. consumer price data that posted the biggest rise in

nearly 1-1/2 years. The closely watched core inflation index,

which excludes food and energy prices, rose 0.4% in the month,

above forecasts for 0.3%.

With the Federal Reserve already signalling no rush to cut

rates further, investors scaled back expectations of more policy

easing from the Federal Reserve this year to just 28 basis

points, equivalent to just one cut.

Benchmark Treasury yields - which tend to drive global

borrowing costs - had jumped to a three-week top of 4.66%

. But they were receding again on Thursday, drooping

back to 4.6% while Germany's 10-year Bund yield was

dipped to 2.43%, having jumped 12 basis points over the previous

two sessions.

Germany's ECB rate setter Joachim Nagel had reiterated on

Wednesday that it needed to take rate cuts gradually.

Analysts at Barclays, meanwhile, expect only one rate cut at

most from the Fed this year.

"Risks are now skewing toward the Fed delivering no cuts

this year, and we are putting somewhat more weight on

off-baseline scenarios where rate hikes enter the conversation,"

they said in a note to clients.

'JEALOUSY AND RAGE'

Ukraine's government bonds continued to climb on the peace

hopes, although there was worry among top European politicians

that a deal was being forced on Kyiv and could encourage more

Russian aggression in future.

Lithuanian Defence Minister Dovile Sakaliene warned that

Europe should not fall "under the illusion that Mr. Trump and

Mr. Putin are going to find the solution for all of us" as that

would be a "deadly trap".

"Frigid spinster Europe is mad with jealousy and rage,"

Dmitry Medvedev, a former Russian president, wrote on Telegram.

He said Europe had not been warned of the Putin-Trump call or

consulted about its content.

"It shows its real role in the world," he said. "Europe's

time is over."

Not for Europe's carmakers though it seemed. They raced 3.6%

higher in the sector's best day in nearly a year. Russia

was a highly profitable market for many major firms before

Moscow's 2022 invasion of Ukraine.

Back in FX markets, the dollar was 0.2% weaker

at 154.15 yen, having jumped 1.3% on Wednesday. The yen was

licking its wounds at 153.95 yen per dollar, although it

remained up about 2% for the year so far.

Among the main commodities, oil prices extended their recent

fall as the hopes for a Russia and Ukraine peace deal bolstered

the possibility of an easing of Russian oil sanctions that have

disrupted supply flows.

U.S. crude fell 1.4% to $70.36 a barrel, after

dropping 2.7% overnight, and Brent was also 1.4% lower

at $74.12, having dropped 2.4% overnight.

Gold rose 0.4% to $2,915 per ounce, not far from its

record high of $2,942.70 hit on Tuesday.