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Stocks fall from record highs

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Markets wait for U.S. CPI data on Tuesday

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Bank of Japan could exit negative rates

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Bitcoin hits new all-time high

(Rewrites throughout)

By Elizabeth Howcroft

LONDON, March 11 (Reuters) - European stock indexes were

mostly in the red in early trading on Monday, falling from last

week's record highs as traders grappled with uncertainty over

the economic outlook and waited for U.S. inflation data later in

the week.

U.S. stocks edged down from recent highs on Friday, in a

move analysts attributed to profit-taking, after U.S. payrolls

data presented a mixed picture but maintained expectations for a

Federal Reserve rate cut in June.

Traders are now focused on U.S. inflation data due on

Tuesday, which could change expectations for when major central

banks will begin cutting rates.

At 0948 GMT, the MSCI World Equity index was down 0.2% on

the day, having hit a new all-time high on Friday.

The pan-European STOXX 600, which also hit an all-time high

on Friday, was down 0.5%. London's FTSE 100 was down

0.3% and Germany's DAX was down 0.7%.

Amelie Derambure, senior multi-asset portfolio manager at

Amundi, said that Monday's downturn could be due to uncertainty

about the economic outlook, and high valuations in stocks.

"There are some elements on the macro outlook that are maybe

not as clear as one was willing to believe," she said.

Last week, comments from Fed Chair Jerome Powell and

European Central Bank policymakers raised expectations that

interest rate cuts will begin in summer, helping push stock

indexes to new highs.

Derambure said there is "fatigue" in stocks, pointing to

a split in the trajectories of the so-called "Magnificent Seven"

group of U.S. technology stocks, which have rallied strongly in

recent years. A slump in Tesla this year has seen it

diverge from the group.

"To us, there are some excesses in the markets so we

want to be a bit more cautious on that front," she said.

"We believe it's all priced for perfection and the reality

might be slightly different."

Tuesday's U.S. consumer price index (CPI) report for

February is forecast to rise 0.4% for the month and keep the

annual pace steady at 3.1%. Core inflation is seen rising 0.3%,

which will nudge the annual pace down to the lowest since early

2021 at 3.7%.

U.S. Treasury yields have declined in recent weeks, as hopes

for a rate cut put downward pressure on yields. The U.S. 10-year

yield was down 3 basis points at 4.0672%.

Euro zone government bond yields were mostly lower, with

German 10-year yield steady at 2.258% after last

week seeing its biggest weekly fall since December.

The U.S. dollar index was flat at 102.68, having

dropped more than 1% last week, and the euro was steady at

$1.09375.

The yen edged higher as Reuters reported that a growing

number of Bank of Japan policymakers are warming to the idea of

ending negative rates this month.

The dollar was down 0.4% against the yen, with the pair at

146.52.

Data released on Monday showed Japan was not in recession

after economic growth was revised up to an annualised 0.4% for

the December quarter.

Chinese stocks gained after data over the weekend showed a

bounce in inflation. China also said it will improve home sales

in a "forceful" and "orderly" way, as the country's beleaguered

residential property market remains troubled by weak demand.

Oil prices recovered, having fallen last week due to

concerns about slow demand in China. Brent futures were up 0.4%

at $82.42 a barrel, while U.S. West Texas Intermediate

(WTI) was up 0.35% at $78.28 a barrel.

The decline in the dollar and bond yields has been

supportive of non-yielding gold which was up at $2,180.63 an

ounce, having surged 4.5% last week to record peaks. GOL/

Cryptocurrency bitcoin hit a new all-time high at $71,836

.