NEW YORK (CNNMoney.com) - Stock futures pared gains Wednesday after the release of the much-anticipated Consumer Price Index dashed hopes that the Federal Reserve would halt its series of rate hikes.

The CPI for May rose a sharper-than-expected 0.3 percent, sending stock futures tumbling, after they had made early gains.

Tuesday's Producer Price Index report, which measures inflation at the wholesale level, failed to ease fears that another rate hike was on the way. (Full story)

The Consumer Price Index, the government's key measure of retail prices, posted a 0.4 percent rise in May, compared to the 0.6 percent rise reported in April. That was in line with forecasts of economists surveyed by Briefing.com. (Full story)

But the even more closely watched core CPI, which strips out often volatile food and energy prices, rose 0.3 percent, the same as the rise seen in April that has fueled a sell-off in worldwide equity markets for the last month. Economists had forecast only a 0.2 percent increase in May.

The higher-than-expected CPI report could fuel expectations of even more hikes at future meetings.

Oil prices were slightly higher ahead of the weekly report on U.S. fuel inventories due at 10:30 a.m. ET.

The July light crude futures contract for NYMEX rose 14 cents to $68.70 in electronic trading, while the July contract for Brent crude gained 2 cents to $66.94

Major markets closed mostly higher Wednesday in Asia, as stocks rebounded from the sharp sell-off there Tuesday. Major European markets were lower in early trading. Steelmaker Arcelor announced it was holding new talks with hostile bidder Mittal Steel (Research) about a possible merger. And French insurer AXA (Research) agreed to buy Winterthur from Credit Suisse Group (Research) for $9.9 billion.

But aircraft maker Airbus warned after the close Tuesday of new delays of at least six months in deliveries of its A380 superjumbo. Shares of European Aeronautic Defense and Space Co., which owns 80 percent of Airbus, were down 27 percent in Paris trading, while shares of U.S. competitor Boeing (Research) gained 0.6 percent in Frankfurt trading.

Treasury prices were lower, lifting the yield on the benchmark 10-year note to 4.98 percent from the 4.96 percent level reached late Tuesday. The dollar was lower against the yen and the euro.

In other corporate news, software provider Microsoft (Research) warned of eight "critical" security flaws in its Windows operating system and Office software after the market close Tuesday. Shares of Microsoft lost 0.5 percent in early Frankfurt trading.

Ethanol producer VeraSun Energy priced its initial public offering at $23 per share, above the its previous forecast range of $21 to $22, while apparel retailer J. Crew Group, signaled it is planning its own IPO of up to 18.8 million shares for $15 to $17.

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