Gold fell, the dollar held on to its gains and government bonds came under some selling pressure, which pushed up yields.

The MSCI All-World index was up 0.1%, encouraged by gains on Wall Street overnight and by a pickup in technology stocks in Asia.

Investors are pricing in the prospect of at least three interest rate cuts by the Fed this year, most likely starting in June. Tuesday's CPI did little to shake this conviction.

"The inflation situation is going to likely drag out for several more months, thus possibly keeping the first Fed rate cut still on the sidelines for a bit longer than expected," Russell Price, chief economist at Ameriprise Financial Services, said.

"We'll have to see another month or two of the data to see if we truly do get a deceleration in some of the core costs. It's still a wait-and-see situation. There are still components that are running hot that need to decelerate," he said.

U.S. stock index futures were up 0.4-0.5%, suggesting gains at the opening bell later, while in Europe, the STOXX 600 was 0.5% higher, having traded up by as much as 0.7%.

A stronger majority of economists in the latest Reuters poll also expect the Fed to start cutting rates in June. The survey showed more respondents expected any change in Fed policymakers' rate projections at the March meeting to signal fewer cuts overall this year, not more.

The yield on 10-year Treasury notes edged up 1 basis point to 4.118%, while the dollar index, which measures the performance of the U.S. currency against six others, was up 0.14% at 102.93, having hit a roughly two-month low of 102.33 last week.

YEN BACK UNDER PRESSURE

The yen fell against the dollar after Bank of Japan Governor Kazuo Ueda offered a slightly bleaker assessment of the country's economy than he had in January.

This doused some of the optimism that the central bank might ditch its negative rate policy when it meets this month, which weighed on the Japanese currency, allowing the dollar to rise 0.4% to 147.53 yen.

A growing number of BOJ policymakers are warming to the idea of ending negative rates this month, four sources familiar with the central bank's thinking told Reuters last week. The changing expectations have helped the yen perk up over the past week.

Futures now imply a 47% chance the BOJ will shift rates to zero at its meeting on March 18-19, though some traders still think it might wait until its April 26 meeting.

"The question for investors is whether the BOJ will stop at ending negative rates, or start a tightening cycle. We think the former," Frank Benzimra, head of Asia equity strategy at SocGen, told the Reuters Global Markets Forum.

STERLING, GOLD EASE

Sterling eased, falling 0.1% to $1.279, after data showed UK wage growth cooled a little more than expected last month, putting a bit more pressure on the Bank of England to cut rates sooner rather than later.

Spot gold fell 0.4% to $2,173 an ounce, still in sight of last week's record high of $2,194.99.