London (AFP) - European equities staged a relief rally Tuesday, one day after tanking on fears over the Covid outbreak in China and rising interest rates in the United States.
Wall Street failed to follow through on Monday's gains, with the three major markets slipping lower ahead of Google-parent Alphabet and Microsoft reporting results.
The European single currency hit a two-year low against the dollar, which was boosted by its haven status amid Ukraine turmoil.
World oil prices rebounded from recent losses on fears over weaker Chinese demand.
'Relief rally'
"European markets are enjoying a modest relief rally...after Monday's sharp sell-off, lifted by some positive momentum into the US close last night," said Victoria Scholar, investment head at Interactive Investor.
London's benchmark FTSE 100 index rose 0.7 percent overall in afternoon deals, though HSBC bank shares slid 4.5 percent on news of falling first-quarter profits.
Frankfurt and Paris also won 0.7 percent in afternoon trading.
Asian indices diverged as investors scrambled to recover from Monday's global rout, but fears lingered over China's Covid lockdowns and the US Federal Reserve's rate-hiking plan.
The Omicron flare-up across China has led authorities to impose strict containment measures in its biggest cities, shutting off millions of people and threatening to deal a hammer blow to the world's number two economy.
Hong Kong stocks edged up but made only a small dent in the massive losses suffered the day before, while Shanghai extended the previous day's losses of more than five percent.
Sentiment was soothed somewhat after the People's Bank of China vowed to boost growth and consumption.
China's Covid measures have dealt a severe blow to its economy, leading to concerns about knock-on effects for the rest of the world -- given its reliance on Chinese-made goods.
'Wait-and-see
The China crisis comes as traders grapple with a hawkish Fed, which is struggling to control inflation that sits at a more than 40-year high.
US central bank policymakers have said they are keen to lift rates several times this year to get a grip on prices, with boss Jerome Powell indicating a half-point rise next month followed by more before January.
Added to the picture, the Ukraine war has sparked additional markets turmoil owing to the impact on commodity prices and inflation.
While Wall Street got a shot in the arm from Elon Musk's vast $44-billion (41-billion-euro) agreed purchase of Twitter on Monday, the momentum failed to carry through to Tuesday.
The Dow shed 0.8 percent at the open, with the S&P 500 and tech-heavy Nasdaq Composite also lower ahead of earnings from Google-owner Alphabet and Microsoft.
The dip "reflects a wait-and-see attitude in front of those reports and a wait-and-see perspective as to whether there will be any follow through on yesterday's rebound effort," said market analyst Patrick J. O'Hare at Briefing.com.
He said a failure by investors to react positively to data showing a rebound in March of orders of US durable goods was "another indication that market participants have their doubts about stronger economic activity persisting in the face of clear growth obstacles like hawkish-minded central banks and ongoing supply chain pressures that have been felt with China's lockdowns."
Key figures at 1330 GMT
London - FTSE 100: UP 0.7 percent at 7,428.56 points
Paris - CAC 40: UP 0.7 percent at 6,492.95
Frankfurt - DAX: UP 0.7 percent at 14,022.43
EURO STOXX 50: UP 0.5 percent at 3,777.63
New York - Dow: DOWN 0.8 percent at 33,777.46
Tokyo - Nikkei 225: UP 0.4 percent at 26,700.11 (close)
Hong Kong - Hang Seng Index: UP 0.3 percent at 19,934.71 (close)
Shanghai - Composite: DOWN 1.4 percent at 2,886.43 (close)
Brent North Sea crude: DOWN 0. percent at $102.per barrel
West Texas Intermediate: DOWN 0. percent at $98.per barrel
Euro/dollar: DOWN at $1.0678 from $1.0713 late on Monday
Pound/dollar: DOWN at $1.2675 from $1.2741
Euro/pound: UP at 84.26 pence from 84.08 pence
Dollar/yen: UP at 127.23 yen from 128.14 yen
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