Japanese shares have touched a 34-year peak while European stocks and S&P 500 futures slipped as investors waited for a US inflation report that could shape Federal Reserve policy. Treasuries and the US dollar were little changed before the inflation numbers. Japan's Nikkei continued to advance, climbing to 38,010 on Tuesday, not far from the record high of 38,957 the benchmark touched on December 29, 1989. The Nikkei has gained more than 13 per cent so far this year after rising 28 per cent in 2023. Foreign investors have flocked to the market, attracted by low valuations, changes in corporate governance, and a weak yen that has made Japanese companies' products more attractive globally. "US yields have moved up year to date," said Max Kettner, chief multi-asset strategist at HSBC. "In the absence of any kind of meaningful tightening from the Bank of Japan that really hurts the Japanese yen, (which) helps the export-sensitive Japanese equity market." Europe's continent-wide Stoxx 600 index slipped 0.33 per cent in early trading, after rising 0.54 per cent on Monday, as investors turned cautious before the US data. Germany's DAX stock index was 0.72 per cent lower. Britain's FTSE 100 slipped 0.15 per cent while the pound climbed 0.1 per cent after data showed wage growth was stronger than expected in the last three months of 2023. Futures for the US S&P 500 fell 0.32 per cent, while Nasdaq futures were down 0.4 per cent. January US inflation data could jolt markets on Tuesday morning, Washington time (early Wednesday AEDT). Economists polled by Reuters expect the consumer price index to rise 2.9 per cent year-on-year, down from 3.4 per cent in the previous month. Market pricing shows investors think there's a 70 per cent chance of an interest rate cut by May, "and there appears room to push that further to June with markets remaining sensitive to hawkish surprises for now", Chanana said. Investors have lowered their bets on rate cuts from the biggest central banks in recent weeks as US data has come in stronger than expected. They now see roughly 110 basis points of cuts by the end of the year, down from about 145 basis points at the start of February. The yield on 10-year Treasury notes was up very slightly at 4.19 per cent. The dollar index, which measures the US currency against six rivals, was little changed at 104.24. The euro was roughly flat at $1.0761. The Japanese yen, which is sensitive to US rates, was last down around 0.2 per cent at 149.67 per dollar, not far from the closely watched 150 level that analysts said would likely trigger further comments from Japanese officials in an attempt to support the currency. Japan's currency has fallen about six per cent against the dollar this year as investors have pushed back their expectations for when the BOJ will end its ultra-loose monetary policy. In commodities, Brent crude oil futures were at $US82.06, up 0.1 per cent on the day.