European stock markets extended gains Tuesday despite Asian and US losses as investors assessed the outlook for global interest rates, dealers said.
Equities rebounded Monday from last week's heavy selloff on easing US money market rates as inflation fears faded and investors were encouraged by progress on coronavirus vaccine rollouts and President Joe Biden's $1.9-trillion stimulus package advanced towards passage.
But the rally didn't carry over into Asian trading, and Wall Street also fell prey to profit-taking soon after the opening bell.
"Today's session has far been mixed for risk assets, as investors try to weigh the impact of rising yields against the prospects of a strong economic rebound with the ongoing Covid vaccine rollouts," said market analyst Fawad Razaqzada at ThinkMarkets.
The rise in yields on government bonds in the US and other key economies last week sparked a market meltdown which was exacerbated by profit-taking.
Higher yields had prompted worries about a sudden shift in monetary policy toward higher interest rates.
However, a stabilisation in the bond market on Friday and Monday appears to have staunched the bleeding for now and analysts said worries over a surge in inflation and rate hikes have been overdone.
- Euro ducks under $1.20 -
News Tuesday of steady eurozone inflation sent the European single currency briefly below $1.20 for the first time in three weeks as it too dampened speculation about higher interest rates.
The Eurostat agency said inflation in the 19 countries that use the euro ran at 0.9 percent last month, the same as in January.
In Asia Tuesday, equities sank after a top Chinese regulator raised concerns that bubbles were forming in the financial markets.
US and European markets were not reflective of their underlying economies and would face corrections "sooner or later", said China Banking and Insurance Regulatory Commission chairman and central bank member Guo Shuqing.
Guo's comments come after a number of observers warned equities were due a retreat following a year-long advance from their March 2020 nadir.
"Asia markets have slipped back today after Chinese regulators warned on the prospect of asset bubbles in overseas markets," said analyst Michael Hewson at CMC Markets UK.
"This is hardly a new phenomenon; there's been talk about bubbles in US markets for months and China's property market isn't immune to these sorts of concerns either."
In commodities, oil prices wobbled ahead of a key OPEC+ producer meeting on Thursday, with the markets watching by how much it will step up output as the global economy appears set to shift up a gear as vaccination campaigns roll out.
"The energy market is bracing for more supply to come into the market, but continued vaccine optimism and global reopening hopes will likely limit most of the downward pressure with oil prices," said Edward Moya at Oanda currency trading platform.
- Key figures around 1630 GMT -
New York - Dow: DOWN 0.3 percent at 31,439.83 points
EURO STOXX 50: UP less than 0.1 percent at 3,707.72
London - FTSE 100: UP 0.4 percent at 6,613.78 (close)
Frankfurt - DAX 30: UP 0.2 percent at 14,039.80 (close)
Paris - CAC 40: UP 0.3 percent at 5,800 (close)
Tokyo - Nikkei 225: DOWN 0.9 percent at 29,408.17 (close)
Hong Kong - Hang Seng: DOWN 1.2 percent at 29,095.86 (close)
Shanghai - Composite: DOWN 1.2 at 3,508.59 (close)
Euro/dollar: UP at $1.2074 from $1.2049 at 2200 GMT
Pound/dollar: UP at $1.3955 from $1.3925
Euro/pound: DOWN at 86.50 pence from 86.53 pence
Dollar/yen: DOWN at 106.71 yen from 106.76 yen
Brent North Sea crude: DOWN less than 0.1 percent at $63.65 per barrel
West Texas Intermediate: UP less than 0.1 at $60.66 per barrel