*

U.S. CPI rises 0.2% m-o-m, 2.4% y-o-y

*

Jobless claims surge

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Markets still se 25 bp Fed rate cut in November

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Investors wait on details of China stimulus measures

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Focus on Saturday's briefing on fiscal policy moves

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French budget provides European focus for later in the day

(Updates at 1300 GMT)

By Alun John

LONDON, Oct 10 (Reuters) -

U.S. share futures dropped, the dollar weakened and

benchmark Treasury yields dipped as marginally-above-expectation

U.S. inflation data and higher jobless claims did not challenge

market bets the Fed will cut rates in November.

Nasdaq futures were last off 0.6% and S&P500

futures dropped 0.4%, slightly extending declines, a day

after the S&P 500 index hit a record high.

The

consumer price index

increased 0.2% last month after gaining 0.2% in August. In

the 12 months through September, the CPI climbed 2.4%. That was

the smallest year-on-year rise since February 2021, but was

above the 0.1% and 2.3% expected by analysts polled by Reuters.

Excluding the volatile food and energy components, the

CPI increased 0.3% in September, again slightly above

expectations.

Also in the mix was a surge in the number of Americans

filing

new applications for unemployment benefits

last week, partially boosted by Hurricane Helene and

furloughs at Boeing ( BA ) amid a nearly four-week-old strike at

the U.S. planemaker.

The data reinforced market expectations that the Federal

Reserve will cut rates by 25 basis points at its November

meeting, with market pricing reflecting around a 90% chance of

such a move.

Ahead of the release, some analysts were concerned about

of more substantially higher-than-expected print that would

cause the Federal Reserve to not cut rates at its next meeting,

building on strong non farm payrolls data last week.

"It's not terrible news, but it's certainly not good

news and it just simply indicates that maybe the best gains, the

best gains of inflation may be behind us for the next couple

months," said Peter Cardillo, chief market economist, Spartan

Capital Securities.

The U.S. 10 year yield dropped marginally after the data

and was last flat on the day at 4.07%.

It hit its highest since late July earlier in the day,

and has jumped more than 20 basis points in the past week,

largely on the back of a Friday's much hotter than expected

payrolls data.

The dollar weakened a fraction and was last down 0.1%

against a basket of major peers. Its biggest move was

against the rate-sensitive yen, falling 0.6% to 148.43 yen.

The euro was up 0.06% at $1.0947, and the

pound was steady at $1.3078.

In Europe, the new French government was set to deliver its

2025 budget late on Thursday with plans for 60 billion euros'

($66 billion) worth of tax hikes and spending cuts to tackle a

spiralling fiscal deficit.

The now closely watched spread between French and German

government bonds, a gauge of how much premium investors demand

for holding French debt, was steady at 76 bps.

Its recent highs have been above 80, but it had stood around

50 bps before President Emmanuel Macron called a parliamentary

election in June.

CHINA

Chinese shares continued to be volatile and got a lift early

in the Asia session as China's central bank kicked off its 500

billion yuan facility to spur capital markets, a plan it

announced in late September as part of a series of stimulus

measures.

But the onshore blue-chip CSI300 index failed to

hold all those gains and closed up just over 1%.

It had fallen 7% on Wednesday, triggered by investor

concern about the lack of details in the stimulus package.

Hong Kong's Hang Seng surged over 3%, after slipping

1.3% on Wednesday, and is up 26% this year.

The market's attention is now firmly on a finance ministry

press conference on Saturday that will provide details of the

stimulus plan.

"We believe the consensus is expecting around 2 trillion to

3 trillion yuan in ... fiscal stimulus measures," Richard Tang,

China strategist at Julius Baer, said.

Tang expected additional fiscal measures in coming weeks.

In commodities, oil prices rose as investors contended with

rising tensions in the Middle East and the impact on oil supply,

as well as a spike in demand as a major storm barrelled into

Florida.

Brent crude futures were 1.8% higher at $78.0 a

barrel, while U.S. West Texas Intermediate (WTI) futures

rose a similar amount to $74.44 a barrel.

Gold was 0.2% higher at $2,613 an ounce.