Portugal Colonial - European, US stocks up despite China Covid fears

London, Paris and Frankfurt made modest progress in early afternoon deals after a mixed opening, while Wall Street opened in the green.

The optimism came after a mixed Asian showing, as worries grew over the economic fallout of Beijing's efforts to contain rising infections in the world's second-largest economy.

"China remains entirely polarising," noted Stephen Innes of SPI Asset Management.

"Some investors are convinced that China's reopening is a formality and will be catalysed by the WHO downgrading Covid to an endemic. We know China's reopening will be laced with fits and starts," he added.

"You cannot rule out more intermittent lockdowns in the near term, but in a more targeted way instead of widespread."

Traders are fearful that Chinese authorities will revert to highly restrictive Covid containment measures that have already dealt a chilling blow to its economy this year.

"This isn't just about China," City Index analyst Fiona Cincotta told AFP.

"Renewed crackdowns in the world's second largest economy raise the prospect of a global recession."

World oil prices also clawed back ground, having tumbled on Monday to lows unseen since January on forecasts of a hit to Chinese demand, although analysts warned the recovery could be limited.

"The upside potential is being limited by a general sense of uncertainty brought by China's unclear demand prospects while also being impacted by the ongoing Russia-Ukraine conflict," said Walid Koudmani, chief market analyst at XTB.

The dollar slid against main rivals ahead of minutes from the Federal Reserve's latest policy meeting that saw it carry out another big hike to US interest rates.

Hopes that the central bank will begin to take its foot off the pedal were boosted earlier this month by figures showing US inflation slowed more than expected, suggesting a series of hikes were beginning to bite.

- 'Serious headwinds' -

The OECD forecast Tuesday that world economic growth will slow sharply from 3.1 percent this year to 2.2 percent next year on high inflation.

And it warned of "serious headwinds" including rising interest rates, surging energy prices and Russia's war on Ukraine.

Global stock markets began November with a rally on easing inflation concerns and signs China was edging towards a looser approach to the disease.

However, the optimism has been given a massive jolt since the country announced its first virus deaths in six months.

Case numbers have surged across China, with residents in Beijing worried that a record number of new infections will lead to lockdown measures similar to those seen earlier in the year in Shanghai, which lasted for months.

The flare-ups came just a week after China said it would begin rolling back some of the strict Covid rules that have been in place since the pandemic started in 2020, even as the rest of the world has moved on.

- Key figures around 1430 GMT -

London - FTSE 100: UP 0.6 percent at 7,419.67 points

Paris - CAC 40: UP 0.2 percent at 6,649.79

Frankfurt - DAX: UP 0.3 percent at 14,421.25

EURO STOXX 50: UP 0.4 percent at 3,923.14

New York - Dow: UP 0.6 percent at 33,910.82

Tokyo - Nikkei 225: UP 0.6 percent at 28,115.74 (close)

Hong Kong - Hang Seng Index: DOWN 1.3 percent at 17,424.41 (close)

Shanghai - Composite: UP 0.1 percent at 3,088.94 (close)

Euro/dollar: UP at $1.0264 from $1.0242 on Monday

Dollar/yen: DOWN at 141.41 yen from 142.14 yen

Pound/dollar: UP at $1.1878 from $1.1823

Euro/pound: DOWN at 86.43 pence from 86.63 pence

Brent North Sea crude: UP 1.5 percent at $88.79 per barrel

West Texas Intermediate: UP 1.5 percent at $81.25 per barrel

X.Matos--PC