Ahead of the open London's blue chips are tipped to open around 27 points higher on Friday, riding a wave of overnight optimism. The tone was set on Wall Street, where the S&P 500 closed at a record and the Nasdaq hit a two-month high.

By Lucia Mutikani WASHINGTON, Aug 12 (Reuters) - U.S. consumer prices barely increased in July as the cost of gasoline declined for a second straight month, while underlying inflation was benign, further reducing the odds of an interest rate hike from the Federal Reserve next month.

For the rest of 2026, models from forecasting companies like Trading Economics anticipate an inflation rate of about 3.5% through the middle of the year. After that, it may decline to around 3%.

Annual US inflation dipped to 3.4% in July, with food costs slowing and housing keeping prices slightly higher.

Shares mostly declined Friday in Asia and U.S. futures were little changed after U.S. inflation data showed a better-than-expected improvement in July. Oil prices were holding steady after slipping in recent days.

The annual rate of inflation began to accelerate again in July after slowing in June, the U.S. Bureau of Labor Statistics reported on Wednesday.

Tech firms led on a mixed day for stocks Thursday as investors push back into the sector after a summer rout, with confidence boosted by easing US interest rate hike fears after data showed inflation slowing last month.

Spot gold gained 0.9% to $4,406.34 per ounce. U.S. gold futures for December delivery rose 0.6% to $4,466.70. Bullion climbed to a 10-week high on Tuesday before hitting technical resistance at the 100-day moving average around $4,387 and closing lower for the second time this month.