London (AFP) - European and US stock markets rose Wednesday, with easing Omicron virus concerns eclipsing fresh fears of monetary policy tightening in both Britain and the eurozone as the world battles rocketing inflation, dealers said.
World oil prices zoomed to more seven-year peaks on renewed unrest in the crude-rich Middle East, and on expectations of resurgent post-pandemic demand.
London stocks won 0.5 percent in afternoon trading as British Prime Minister Boris Johnson announced that most Covid restrictions would be lifted from next week.
Meanwhile, official data showing UK inflation soared to a near three-decade high in December raised speculation of another Bank of England interest rate hike in February and briefly pushed the pound to a 22-month euro peak.
Paris stocks gained 0.8 percent and Frankfurt added 0.6 percent.
Yields for 10-year German bonds rose above zero percent for the first time since May 2019, as surging inflation also prompted fears of monetary tightening in the eurozone.
Wall Street moved higher at the opening bell, recovering part of the ground Tuesday when it suffered sharp losses.The Dow added 0.2 percent, the S&P 500 rose 0.4 percent and the tech-heavy Nasdaq Composite climbed 0.6 percent.
"It's just a brief rebound," OANDA analyst Craig Erlam told AFP.
"There's still so much anxiety around inflation and interest rates across the markets," he added.
'Slightly more optimistic'
Despite the prospect of more interest rate hikes, there remains a broad belief that the global recovery is still on track as economies reopen and fears over the less-severe Omicron coronavirus variant recede.
"We have to consider that markets have been extremely worried about the potential for further lockdowns/restrictions resulting from the recent Omicron variant," XTB analyst Walid Koudmani told AFP.
"Since that has proven to be a less significant concern than previously expected, markets are now slightly more optimistic as many economies are expected to extend the post-pandemic recovery."
In contrast, Asian equity markets were hit by growing fears about the US Federal Reserve's plans to fight surging inflation by ramping up interest rates, following a hefty sell-off on Wall Street.
A rise in prices since early 2021 has forced central banks around the world to start winding back the colossal financial support put in place at the start of the pandemic.
The main focus is now on the Fed, which has so far refrained from lifting rates to bring US inflation down from four-decade highs.
Officials are currently reining in their massive bond-buying programme and aim to hike borrowing costs in March.
Some commentators predict a 50 basis-point rise -- which would be the first that big since 2000 -- having initially estimated 25 points.
Expectations for a quick run-up in rates has sent Treasury yields rocketing and caused near-panic, with all three main indexes on Wall Street deep in the red so far this year, having hit multiple records in 2021.
In commodities, oil extended gains on news of an explosion Tuesday at a key pipeline running from Iraq to Turkey that transports more than 450,000 barrels a day.Turkey's state oil said Wednesday that it had resumed crude flows through the pipeline.
That came a day after Yemen's Huthi rebels in Abu Dhabi claimed an attack that triggered a fuel tank blast, and warned civilians and foreign firms in the United Arab Emirates to avoid "vital installations".
Key figures around 1430 GMT
London - FTSE 100: UP 0.5 percent at 7,603.76 points
Frankfurt - DAX: UP 0.6 percent at 15,872.78
Paris - CAC 40: UP 0.8 percent at 7,191.39
EURO STOXX 50: UP 0.9 percent at 4,294.95
New York - Dow: UP 0.2 percent at 35,434.61
Tokyo - Nikkei 225: DOWN 2.8 percent at 27,467.23 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 24,127.85 (close)
Shanghai - Composite: DOWN 0.3 percent at 3,558.18 (close)
Euro/dollar: UP at $1.1347 from $1.1325 late Tuesday
Pound/dollar: UP at $1.3635 from $1.3596
Euro/pound: DOWN at 83.22 pence from 83.30 pence
Dollar/yen: DOWN at 114.47 yen from 114.61 yen
Brent North Sea crude: UP 0.8 percent at $88.20 per barrel
West Texas Intermediate: UP 1.0 percent at $86.24 per barrel
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