LONDON – Europe's stocks and main currencies fell on Monday ahead of upcoming eurozone inflation data, Fed, BOE and RBA rates hikes later in the week and as Russia's withdrawal from a Ukrainian grain transit pact sent wheat and corn prices higher.

The regional STOXX 600 index was nudged lower by 0.6 percent-0.8 percent drops in the mining and oil and gas sectors.

Euro zone October inflation numbers due shortly are seen hitting a fresh record of 10.2 percent year-on-year, in what will make for more uncomfortable reading for the European Central Bank, which is targeting 2 percent price growth.

Combined with news that Italy's economy grew far more strongly than expected in the third quarter, eurozone bond yields moved higher although the euro succumbed to another bout of US dollar strength.

Russia's withdrawal from a deal to allow Ukrainian grain shipments to reach global buyers at the weekend saw wheat futures leap more than 8 percent at one point, before paring the gains to around 6 percent or $8.75 a bushel in Europe.

"Depending on the scramble to replace planned Ukraine cargoes, prices might even head into double digits for a period," said Commonwealth Bank of Australia strategist Tobin Gorey. Palm oil futures rose nearly 5 percent.

Spooked

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent. The index is down ten months in a row and near two-year lows, rattled by growth and interest-rate hike fears.

In contrast Japan's Nikkei ended 1.8 percent higher and is set for its best month in nearly two years amid an ongoing slide in the yen which is helping exporting firms.

The mixed performance follows an erratic earnings season on Wall Street and bond and currency markets tempering some wagers on a possible change in tone from the Fed this week. The dollar, after posting two weeks of losses, steadied on Monday and rose 0.5 percent on the yen.

"Things had gotten too pessimistic," said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners in Sydney, of recent gains. Heavy drops in US tech giants perhaps signal enough bad news is now already in the price, she said.

Yet Treasuries slipped a little further, with benchmark 10-year yields up 3 basis points to 4.0392 percent. S&P 500 futures fell 0.2 percent, while Germany's 10-year government bond yield, the benchmark for the euro area, was up 5.5 basis points (bps) to 2.143 percent.

Focus was also on Brazil's markets after leftist leader Luiz Inacio Lula da Silva narrowly defeated right wing President Jair Bolsonaro in a runoff election on Sunday.

Early indications pointed to a bumpy ride with speculation swirling around the makeup of Lula's cabinet and the risk that Bolsonaro disputes the narrow result.

The Fed meanwhile is all but certain to raise rates by 75 basis points on Wednesday, with markets focused on the communication of the outlook.

The latest round of hopes for a shift in the Fed's tone seems to have stemmed from a Wall Street Journal article two weeks ago, flagging a possible discussion about slowing hikes.

But a report from the same author over the weekend pointed to a lengthy period of high rates and traders have now tempered initial optimism, pricing in the funds rate to hit near 5 percent by May next year.

In the oil markets, Brent crude futures hovered at $95.50 a barrel, while spot gold dipped fractionally to $1,637 an ounce in the precious metals markets.

"We need to be very careful and differentiate between central banks peaking, and central banks pivoting," said NatWest Markets' head of economics and strategy, John Briggs.

"Peak means the year-to-date trends of surging yields, surging dollar, and weak risk assets can lose momentum, but I think we need more visibility on a pivot to fully reverse all those."

As well as the Fed on Wednesday, the Reserve Bank of Australia is expected to raise rates again on Tuesday and the Bank of England looks set to raise its on Thursday too after a month of political and market turmoil.