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Asian stock markets: https://tmsnrt.rs/2zpUAr4

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European stock futures rally 1%, Wall St futures rise

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Oil falls a second day, euro extends gains

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Nikkei gains 1.4% thanks to weaker yen

(Updates prices as of 0600 GMT)

By Stella Qiu

SYDNEY, Feb 13 (Reuters) - U.S. and European stock

futures rallied on Thursday on optimism over prospects of a

peace deal between Ukraine and Russia, offsetting a jump in

Treasury yields as higher inflation threatens to close the door

to any policy easing this year.

Trade war jitters persisted as U.S. President Donald

Trump said he would impose reciprocal tariffs on Wednesday or

Thursday on every country that charges duties on U.S. imports.

Gold prices climbed back towards the record reached on Tuesday.

The euro extended an overnight bounce, last up

0.5% in Asia to $1.0433, helped by Trump's phone calls with

Russian President Vladimir Putin and Ukraine's Volodymyr

Zelenskiy, which raised hopes that the years-long war could be

nearing an end.

Oil prices fell for a second day, testing some key support

levels, while EUROSTOXX 50 futures climbed 1%, pointing

to a higher open for European markets.

Nasdaq futures rose 0.4% and S&P 500 futures

gained 0.2%.

Japan's Nikkei gained 1.4% thanks to a much

weaker yen. MSCI's broadest index of Asia-Pacific shares outside

Japan rose 1.2% to the highest since early

December.

"There were pretty significant moves like in the euro

and European assets. The spectre of war has definitely hung

pretty heavy over the region," said Kyle Rodda, a senior analyst

at Capital.com.

"The optimism is probably somewhat premature."

Chinese blue chips were 0.2% higher and Hong

Kong's Hang Seng index extended its bullish run, up 2.5%

to another four-month high.

Overnight, data showed U.S. consumer prices rose by the

most in nearly 1-1/2 years in January. 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.

Treasury yields jumped on the inflation data, with 10-year

yields up 10 basis points overnight to a three-week

top of 4.66%. They were down 3 bps on Thursday at 4.6092%.

Analysts at Barclays still expect one rate cut 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 client.

In the foreign exchange market, the dollar

lost 0.2% to 154.15 yen, having jumped 1.3% overnight. The yen

was the biggest loser from higher U.S. yields.

In commodities markets, oil prices extended their overnight

decline as hopes grew for a peace deal between Russia and

Ukraine that would mean the end of sanctions that have disrupted

supply flows.

U.S. crude fell 1% to $70.64 a barrel, after dropping

2.7% overnight and Brent was also 1% lower at $74.43,

having dropped 2.4% overnight.

Gold rose 0.5% to $2,918 per ounce, not far from

its record high of $2,942.70 hit on Tuesday.