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 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 .STOXX dipped 0.3% in early trading, after being poised earlier for slim gains. Britain's FTSE 100 .FTSE led losses among regional markets with a 0.4% drop. .L

S&P 500 futures ESc1 and Nasdaq futures NQc1 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 GBP=D3 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.O, which is set to report after the market close.

Nvidia's 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 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 .MIWD00000PUS, which tracks shares in 47 countries, lost 0.1%.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS firmed 0.3%, having already climbed for four straight weeks to reach a two-year top.

CENTRAL BANK WATCH

The dollar USD= 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 0#FF: imply about a 66% chance of a rate cut by September and have 43 basis points of easing priced in for this year. FEDWATCH

After the UK inflation data, the pound climbed 0.3% before giving up most of its gains. It was last at $1.2729 GBP=D3, near two-month highs.

The euro was down 0.2% at $1.0831 EUR=EBS, 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 NZD=D3 as bond yields spiked, while it surged to 17-year peaks on the relatively low-yielding yen NZDJPY=R.

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 LCOc1 trimmed losses and were last down 0.5% at $82.46 a barrel, as did U.S. West Texas Intermediate crude (WTI) futures CLc1, which were last down 0.5% at $78.30.

Reporting by Tom Wilson in London and Wayne Cole in Sydney; Editing by Subhranshu Sahu, Sam Holmes, William Maclean and Emelia Sithole-Matarise

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