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aussie stocks seen higher as u.s. rate fears ease Aussie stocks seen higher as U.S. rate fears ease
June 15, 2004 6:26pm ET (Reuters)

SYDNEY, June 16 (Reuters) - Australian stocks are expected to open higher on Wednesday, reversing losses made in the previous session after a key U.S. inflation report eased fears of a big rate hike by the Federal Reserve.

The core U.S. consumer price index, more closely watched by Fed policymakers as it excludes volatile food and energy, rose just 0.2 percent in May, in line with forecast, calming worries the Fed would have to tighten aggressively.

Overall CPI, however, advanced a stronger-than-expected 0.6 percent, driven by surging energy and food costs.

The Dow Jones industrial average put on 0.4 percent to 10,380.43, helping propel Australia's June stock index futures up 11 ticks to 3,480.0.

On Tuesday, the underlying benchmark S&P/ASX 200 index sagged 0.3 percent to 3,468.4 with losses across the board as buyers sat on the sidelines ahead of the CPI data.

Worries about an aggressive Fed were also soothed after Fed Board Governor Mark Olson said the U.S. central bank should be able to raise rates gradually, although economic events would ultimately dictate the pace.

Resource stocks could get some reprieve following Tuesday's weakness as base metals prices bounced off their lows on the London Metal Exchange.

Gold also settled higher after the U.S. dollar retreated on the back of receding expectations of a big U.S. rate hike.