Portugal Colonial - Stocks mostly rally but oil slides

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 2.6 percent, having plunged more than four percent Tuesday, 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 at ING Groep.

He added that the long-term outlook remained better as growth picked up.

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.

Europe built on a rally Tuesday ahead of Wall Street's reopening Wednesday and minutes from the Federal Reserve's December policy meeting, when 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.

There is a broad consensus that the Fed's tightening measures to tame runaway inflation 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 1200 GMT -

London - FTSE 100: UP 0.7 percent at 7,603.87 points

Frankfurt - DAX: UP 1.7 percent at 14,415.14

Paris - CAC 40: UP 1.8 percent at 6,741.99

EURO STOXX 50: UP 1.9 percent at 3,956.90

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)

New York - Dow: FLAT at 33,136.37 (close)

Dollar/yen: DOWN at 130.58 yen from 130.92 yen on Tuesday

Euro/dollar: UP at $1.0606 from $1.0554

Pound/dollar: UP at $1.2059 from $1.1969

Euro/pound: DOWN at 87.93 pence from 88.15 pence

West Texas Intermediate: DOWN 2.6 percent at $74.96 per barrel

Brent North Sea crude: DOWN 2.6 percent at $80.01 per barrel

P.Mira--PC