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STOXX 600 rises 1.3%

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U.S. consumer prices rise less-than-expected in Nov

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Wacker Chemie jumps on UBS upgrade

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Leveraged European stocks rally on CPI relief

By Amruta Khandekar and Bansari Mayur Kamdar

Dec 13 (Reuters) - European shares climbed on Tuesday after softer-than-expected U.S. inflation data spurred bets that the Federal Reserve would scale back the size of its interest rate hikes in the world's largest economy.

The region-wide STOXX 600 .STOXX was up 1.3%, tracking sharp gains in global markets after the U.S. Labor Department's report showed consumer prices rose 7.1% year-on-year last month - the smallest advance since December 2021.

The latest inflation report marks the last important data point before the Federal Reserve delivers its interest rate decision on Wednesday. The reading follows a smaller-than-expected rise in consumer prices in October.

Traders' bets of a dialled down 50 basis point rate hike from the Fed on Wednesday jumped to 97% after the data from 91% before the report came out, while they saw a 78.3% chance of the European Central Bank raising rates by 50 bps.

"Today's movement in Europe is mostly boosted by global market optimism, which has been triggered by the U.S. inflation data," said Ipek Ozkardeskaya, senior analyst at Swissquote.

"This will feed into a weaker U.S. dollar and a stronger euro and sterling that should help tame inflation in Europe as well."

Final data confirmed Germany's consumer prices, harmonised to compare with other European countries, were 11.3% higher year-on-year in November. Prices had risen 11.6% in October.

Germany's DAX .GDAXI rose 1.3%.

Meanwhile, European Union member countries are meeting in Brussels to attempt to approve a price cap proposed by the European Commission last month to shield consumers from soaring energy costs.

In UK, the Bank of England warned about "significant pressure" on households and businesses due to higher inflation and borrowing costs, but said they were more resilient than before the global financial crisis.

All the STOXX 600 sectors were trading higher, with rate-sensitive tech stocks .SX8P up 3.3% and in the lead.

Banks .SX7E rose 1.4% to near one-week highs.

Leveraged European stocks such as Delivery Hero DHER.DE , Aroundtown AT1.DE , LEG Immobilien LEGn.DE and Grifols GRLS.MC , which analysts see as potentially facing credit stress from rising interest rates, jumped between 5% and 9.3%.

Shares of British American Tobacco BATS.L slipped 1.7% after the U.S. Supreme Court on Monday cleared the way for California to enforce a voter-approved ban on flavoured tobacco products.

Wacker Chemie WCHG.DE rose 5.3% after UBS upgraded the chemical products maker's stock to "buy" from "neutral."

Lufthansa LHAG.DE rose 3.7% after raising its 2022 earnings forecast.

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Pan-European STOXX 600 rises after cool U.S. inflation data Link

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Reporting by Amruta Khandekar, Bansari Mayur Kamdar and Sruthi
Shankar in Bengaluru; Additional reporting by Danilo Masoni in
Milan; Editing by Vinay Dwivedi, Saumyadeb Chakrabarty, Maju
Samuel and David Evans