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Euro STOXX 600 slips

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UK inflation falls less than expected, pound rises

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Markets cautiously optimistic as much rides on Nvidia ( NVDA )

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NZ central bank surprises with hawkish outlook

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Investors await rate clues from Fed minutes

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Graphic: World FX rates http://tmsnrt.rs/2egbfVh

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Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

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Oil slips again, gold ebbs away from record high

(Updates prices as of 1115 GMT)

By Tom Wilson

LONDON, May 22 (Reuters) - Shares fell on Wednesday as

stronger-than-expected inflation in Britain offset hopes that

AI-heavyweight Nvidia ( NVDA ) could meet sky-high expectations, with

investors waiting for clues on any moves by the U.S. Federal

Reserve to begin to cut interest rates.

European stocks dipped 0.3% in early trading, after

being poised earlier for slim gains. Britain's FTSE 100

led losses among regional markets with a 0.4% drop.

S&P 500 futures and Nasdaq futures pointed to

little change in Wall Street shares.

Inflation in Britain fell by less than expected in April and

a key core measure barely dropped, sparking a jump in the pound

and in British government bond yields, as well as

prompting investors to cut their bets on a Bank of England

interest rate cut in June.

The data underscored jitters over whether central banks

would move as quickly as markets hope to reduce interest rates.

Still, investors awaited an earnings report from U.S.

artificial intelligence-heavyweight Nvidia ( NVDA ), which is

set to report after the market close.

Nvidia's ( NVDA ) earnings are set to provide the latest test for a

U.S. stock market rally that has taken indexes to record highs

this year, with the firm's influence on broader markets growing.

With Nvidia's ( NVDA ) chips the gold standard in AI, its results are

widely seen as a barometer for the burgeoning AI industry, whose

evolution has stoked investor enthusiasm and helped drive the

bull run in U.S. stocks.

Turbulence could follow, with options priced for a swing of

8.7% in either direction, worth $200 billion in market value.

"This is a pivotal event," Deutsche Bank analysts wrote. "It

might seem strange that markets are hanging on the results of a

single company, but over recent quarters, the release has become

one of the most important events on the macro calendar."

The MSCI world equity index, which tracks

shares in 47 countries, lost 0.1%.

Earlier, MSCI's broadest index of Asia-Pacific shares

outside Japan firmed 0.3%, having already

climbed for four straight weeks to reach a two-year top.

CENTRAL BANK WATCH

The dollar edged lower ahead of minutes of the U.S.

Federal Reserve's last meeting due later in the day.

Fed Chair Jerome Powell and other officials have dropped

what had been explicit guidance about the likelihood of interest

rate cuts this year, instead focusing attention on broadly

different near-term paths the economy might follow, and their

likely reaction to each case, Reuters reported on Wednesday.

The Fed minutes may provide more details on the shift in

approach. They should confirm its next rate move is still likely

down, but policymakers first need more confidence that inflation

has resumed its downward trend.

Fed fund futures imply about a 66% chance of a rate

cut by September and have 43 basis points of easing priced in

for this year.

After the UK inflation data, the pound climbed 0.3% before

giving up most of its gains. It was last at $1.2729,

near two-month highs.

The euro was down 0.2% at $1.0831, just off its

recent top of $1.0895.

Meanwhile, New Zealand's central bank offered a sobering

assessment of its inflation problems, warning that rates would

have to be higher for longer to bring them to heel in a shock to

local markets.

That saw the kiwi dollar jump 0.9% to a one-month high of

$0.6151 as bond yields spiked, while it surged to

17-year peaks on the relatively low-yielding yen.

Oil prices fell for a third straight session on the

expectations the Fed may keep U.S. interest rates higher for

longer due to sustained inflation, potentially impacting fuel

use in the world's largest oil consumer.

Brent crude futures trimmed losses and were last

down 0.5% at $82.46 a barrel, as did U.S. West Texas

Intermediate crude (WTI) futures, which were last down

0.5% at $78.30.