Portugal Colonial - Stocks mixed on China moves, dollar drops

A largely positive meeting between US President Joe Biden and his Chinese counterpart Xi Jinping indicated an easing of tensions and helped sentiment.

However, there remains a lot of trepidation that central bank interest rate hikes aimed at taming inflation will eventually send economies into a recession.

The US is still expected to carry on hiking interest rates, but cooling inflation in the world's biggest economy means the Federal Reserve is set to pull back on aggressive tightening, weighing on the dollar.

Vice Fed chair Lael Brainard said that while it would probably be right to slow down the rate hikes, "we have additional work to do both on raising rates and sustaining restraint to bring inflation down".

Those comments contributed to Wall Street's three main indices falling Monday.

"European stock markets made tentative gains on Tuesday after a positive handover from Asia in spite of Wall Street snapping a two-day bounce following last week's inflation reading," noted Neil Wilson, chief market analyst at Finalto trading group.

There was more unrest in the tech sector, with Amazon preparing to lay off as many as 10,000 employees, The New York Times reported on Monday.

Asian traders were a little more upbeat, cheered by China's move to ease some of its strict Covid-19 restrictions and provide much-needed support to its beleaguered property sector.

Hong Kong rose more than four percent and Shanghai also closed in positive territory.

Optimism for a thawing in relations between Washington and Beijing was boosted after Biden and Xi's extended talks on the sidelines of the G20 summit in Indonesia.

While there remain differences on hot-potato issues such as Taiwan, the two did find common ground on the Ukraine conflict, climate and the need to avoid another Cold War.

After the talks, Chinese foreign minister Wang Yi described it as a "new starting point", adding that Beijing hoped "to stop the tumbling of bilateral ties and to stabilise the relationship".

After a painful year for markets across the planet, dealers are hopeful that there is finally light at the end of the tunnel.

"It's certainly a time to be thinking about a recovery regime unfolding for markets," said Kristina Hooper of Invesco.

"But it's going to take a little time before we know if this really is something of a turning point for inflation and the Fed can be a lot more comfortable about hastening the end of tightening," she told Bloomberg Radio.

- Key figures around 1145 GMT -

London - FTSE 100: FLAT at 7,384.31 points

Frankfurt - DAX: DOWN 0.2 percent at 14,285.17

Paris - CAC 40: UP 0.3 percent at 6,627.48

EURO STOXX 50: UP 0.2 percent at 3,893.36

Tokyo - Nikkei 225: UP 0.1 percent at 27,990.17 (close)

Hong Kong - Hang Seng Index: UP 4.1 percent at 18,343.12 (close)

Shanghai - Composite: UP 1.6 percent at 3,134.08 (close)

New York - Dow: DOWN 0.6 percent at 33,536.70 (close)

Euro/dollar: UP at $1.0415 from $1.0331 on Monday

Pound/dollar: UP at $1.1870 from $1.1751

Dollar/yen: DOWN at 139.25 yen from 139.90 yen

Euro/pound: DOWN at 87.73 pence from 87.89 pence

West Texas Intermediate: DOWN 0.6 percent at $85.32 per barrel

Brent North Sea crude: DOWN 0.4 percent at $92.80 per barrel

L.E.Campos--PC