SINGAPORE - Stocks were lethargic and oil slid on Wednesday ahead of US consumer price data that could damage hopes for interest rate cuts later this year, while President Joe Biden’s failure to break a deadlock on the debt ceiling also dampened markets.

Europe's benchmark STOXX index fell 0.3 percent, echoing a decline in MSCI's broadest index of Asia-Pacific shares outside Japan, and S&P 500 futures also sagged.

The sour mood in European stocks came despite uplift from the financial sector, where expectation-beating earnings from Credit Agricole helped banks be the top sectoral gainers on the STOXX 600.

Oil prices also sagged, ending a three-day rally, with Brent crude down $1 as US inventories rose in a possible sign of weakening demand.

April US consumer price data is due at 1230 GMT and economists expect the headline CPI to hold steady at an annual 5 percent and core CPI to moderate very slightly to 5.5 percent, though anything stickier could confound bets interest rates will fall.

"That's the thing that'd get taken out if CPI numbers come in on the higher side," said ING economist Rob Carnell.

"It doesn't look particularly sensible if inflation is falling at too slow a rate and that could feed through into higher longer-term treasury yields as well."

Interest rate futures imply about a 60 percent chance the Federal Reserve cuts rates in September, according to the CME FedWatch tool.

Treasuries were broadly steady, with brinkmanship over the approaching US debt ceiling fuelling demand for safe assets, including bonds, on one hand, while also driving investors out of T-bills maturing in early June.

President Joe Biden and top lawmakers failed to break a deadlock over raising the $31.4 trillion US debt limit, but vowed to meet again before June, when the Treasury projects it will start struggling to meet its obligations.

Benchmark 10-year yields held at 3.529 percent. Two-year yields were at 4.049 percent.

CPI watch

Foreign exchange markets have been treading water while markets weigh policymakers' rhetoric against traders' conviction that US interest rates, and the dollar, should fall.

Emerging markets currencies were subdued on Wednesday, with MSCI's index flat as investors awaited direction from the US data.

JP Morgan's G7 FX volatility index sat at a one-year low.

European Central Bank board member Isabel Schnabel said on Tuesday expectations for rate cuts were misplaced, but that didn't give the euro much of a boost, as traders have been reluctant to sell dollars too hard ahead of the CPI data.

An apparent crackdown on due diligence firms is roiling the sector and unnerving investors. 

Brent crude futures hovered at $76.90 a barrel. Gold is starting to settle in above $2,000 an ounce, while bitcoin steadied at $27,732.