INSTANT VIEW: April CPI tamer than expected

NEW YORK (Reuters) - U.S. consumer prices rose a smaller-than-expected 0.2 percent in April as energy prices held steady, a Labor Department report on Wednesday showed.

KEY POINTS: * The rise in April prices was less than the 0.3 percent gain Wall Street analysts polled by Reuters were expecting after a 0.3 percent advance in March. So-called core prices, which exclude volatile food and energy, were up just 0.1 percent, half the increase analysts had forecast. * During the month, energy prices were unchanged after a 1.9 percent rise in March, as gasoline prices dropped 2 percent. However, energy prices are up 15.9 percent from the same time a year ago. * Meanwhile, in a sign higher energy prices are in the pipeline for U.S. consumers, oil hit a record high this week likely pushing gasoline prices higher from record high levels. * Still, year-over-year consumer prices rose more modestly than forecast. Overall prices advanced 3.9 percent from April a year ago and core prices were up 2.3 percent. Analysts were expecting a 4.0 percent advance in overall prices and a 2.4 percent gain in core prices.

COMMENTS:

LOU BRIEN, MARKET STRATEGIST, DRW TRADING, CHICAGO:

"The important component Owners Equivalent Rent rose only 0.2 percent on the month and is rising by 2.6 percent on a year over year basis."

"One trend that continues is the lack of pricing power at the stores, a component called commodities ex-food and energy (goods on the shop shelves) was unchanged on the month and the year-over-year rate is up 0.1 percent."

JIM PAULSEN, CHIEF INVESTMENT OFFICER, WELLS CAPITAL

MANAGEMENT, MINNEAPOLIS:

"I think this takes the edge off. A higher number would have sent the 10-year yield over 4 percent and that would have pressured equities. I think equities will rally, at least at the open."  Continued...