London (AFP) - Stock markets mostly extended a New Year rally Wednesday but oil prices slid further as investors weighed China's reopening moves against its surging Covid cases.
Europe built on a rally from a day earlier, with Paris and Frankfurt jumping more than two percent in afternoon trading following drops in government bond yields, a fall in gas prices and data showing German and French inflation slowing down.
Shares in London managed more moderate gains, up 0.4 percent.
On Wall Street, stocks also picked up despite worries about the US economic outlook, as investors awaited key data expected to give clues on where monetary policy is headed.
Analyst Patrick O'Hare from Briefing.com linked the uptick to the last day of the so-called Santa Claus rally, a stretch over Christmas and New Year that typically sees stocks drifting higher amid light trading volumes.
"Today is the last day of that 'rally period' and Santa Claus is hanging on by a thread," he said.
Gold prices reached the highest level since June, at $1,865.12 an ounce, as traders sought safety in the traditional haven commodity.
Crude prices slumped around three percent, a day after plunging more than four percent, also owing to a mild European winter and a pick-up in the dollar that makes crude more expensive for holders of other currencies.
In addition, "rising Chinese Covid infections could weigh on demand in the immediate term", said Warren Patterson, head of commodities strategy at ING financial group.
"While reliable data is seemingly hard to come by, the view appears to be that there'll be significant disruption in the coming months and then a recovery from around the middle of the year which should then boost demand," said Craig Erlam, senior market analyst at OANDA trading platform.
- Hints on Fed moves -
China's shift out of almost three years of zero-Covid has been widely welcomed, but the breakneck speed at which authorities have lifted restrictions has led to an explosion of cases across the country, dealing another battering to economic activity.
Analysts said concerns about the impact of the mass outbreak were playing off against optimism that the long-term outlook was positive as infections eventually come down and businesses restart.
Hong Kong led stock market advances Wednesday, while Shanghai enjoyed a second straight day of gains.
Tokyo dropped heavily on its first trading day of the year, with Japanese exporters continuing to be hit by a recovering yen.
Investors were focused on the release Wednesday of the minutes of the Federal Reserve's December policy meeting.
At that meeting, the US central bank slowed the pace of interest rate hikes but signalled borrowing costs would reach higher than expected.
The news scuttled a pre-Christmas rally across world markets, and the minutes will be pored over for clues about policymakers' plans for this month's gathering.
The Fed has raised interest rates seven times in the past year to try to cool demand and rein in soaring inflation, and officials have signalled they would stay the course until the job is done.
But there is a broad consensus that the Fed's tightening measures will tip the United States into recession, while the head of the International Monetary Fund has also warned a third of the global economy will contract this year.
Key figures around 1440 GMT
London - FTSE 100: UP 0.4 percent at 7,583.78 points
Frankfurt - DAX: UP 1.98 percent at 14,462.16
Paris - CAC 40: UP 2.2 percent at 6,769.25
EURO STOXX 50: UP 2.3 percent at 3,971.11
New York - Dow: UP 0.4 percent at 33,266.21
Tokyo - Nikkei 225: DOWN 1.5 percent at 25,716.86 (close)
Hong Kong - Hang Seng Index: UP 3.2 percent at 20,793.11 (close)
Shanghai - Composite: UP 0.2 percent at 3,123.52 (close)
Dollar/yen: UP at 131.07 yen from 130.92 yen on Tuesday
Euro/dollar: UP at $1.0612 from $1.0554
Pound/dollar: UP at $1.2054 from $1.1969
Euro/pound: DOWN at 88.06 pence from 88.15 pence
West Texas Intermediate: DOWN 2.98 percent at $74.64 per barrel
Brent North Sea crude: DOWN 3.0 percent at $79.64 per barrel
