Euro Shares to Fall on Inflation Worries

European shares were set to fall on Tuesday, snapping a four-session winning streak, tracking a mixed performance on Wall Street and weaker Asian stock markets as persistently high oil prices fuelled concerns about rising inflation.

Oil extended its rally past $127 a barrel, driven by renewed fears of supply disruption.

U.S. light crude for June delivery rose 18 cents to $127.23 by 0540 GMT, still in sight of the intraday record of $127.82 hit on Friday.

Financial spreadbetters in London expect Britain's FTSE 100 to open down 22 to 31 points; Germany's DAX to open 21 to 35 points lower and France's CAC-40 to open down 6 to 25 points.

Tom Hougaard at City Index expects the UK's FTSE and Germany's DAX to fall in the wake of a mixed session in New York overnight, where the Nasdaq Composite index fell 0.5 percent.

"(The real test) to the strength of the European indices will be how much they sell off. If we can hold on to most of the gains made yesterday, we will have begun a decoupling process from the U.S. markets, at least temporarily," he said in a note.

Market players' focus will be on the May reading of the German economic sentiment index, ZEW, due at 0900 GMT, particularly since a reading of U.S. consumer sentiment on Friday plunged to the lowest in 28 years.

April U.S. producer price data, due at 1230 GMT, will also be in focus. Economists are expecting wholesale price pressures to ease slightly.

The FTSEurofirst 300 index of top European shares rose about 1 percent to 1,378.29 points on Monday, hitting a 4-month closing high as buoyant commodity stocks offset weaker financial stocks.

Elsewhere, the Bank of Japan left interest rates unchanged at 0.5 percent on Tuesday, as expected, opting to take more time to determine when the fog will clear from the economy -- both in Japan and around the world.

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