World Shares Mixed After Wobbly Rally on Wall Street

BANGKOK (AP) -- European markets opened mostly lower Wednesday after a day of gains in Asia as investors awaited greater clarity on where interest rates, inflation and economies are heading.

Germany's DAX slipped 0.3% to 14,517.96 while the CAC 40 in Paris shed 0.2% to 6,489.76. Britain's FTSE 100 was little changed at 7,602.22. The futures for the S&P 500 and the Dow industrials were 0.4% lower.

"Equities are drifting lower as the broader narrative remains unchanged, with peak inflation optimism meeting increasingly hawkish pivots from central banks," Stephen Innes of SPI Asset Management said in a commentary.

In Asian trading, Hong Kong shares surged 2.2% to 22,014.59 on heavy buying of shares in Chinese technology companies after Beijing approved a new batch of video games. That was seen as a sign the business outlook for tech companies is improving after a prolonged regulatory crackdown.

Tokyo's Nikkei 225 gained 1% to 28,234.29 after Japan reported its economy contracted at a lower pace than earlier reported in the January-March quarter, shrinking 0.5% instead of 1%. The latest data showed consumer spending was not as weak as earlier thought.

In India, the Sensex lost 0.4% to 54,905.16 after the Reserve Bank of India raised its key interest rate by 0.5 basis points to 4.9%.

Reserve Bank of India Governor Shaktikanta Das said the decision was aimed at curbing price increases and mitigating the impact of geopolitical tensions, like the war in Ukraine.

"Upside risks to inflation … materialized earlier than expected," Das said.

The Kospi in South Korea was little changed at 2,626.15. In Sydney, the S&P/ASX 200 advanced 0.4% to 7,121.10. The Shanghai Composite index reversed early losses, gaining 0.7% to 3,263.79.

Tencent, China's largest games firm, rose 5.9% even though it was not directly affected by the government approvals. E-commerce giant Alibaba Group Holding soared 9.6% and food delivery concern Meituan advanced 3.5%.

U.S. stocks rallied Tuesday as Treasury yields eased. The S&P 500 climbed 1%, the Dow Jones Industrial Average rose 0.8% and the Nasdaq composite gained 0.9%.

The World Bank sharply cut its forecast for economic growth this year, adding to worries as it pointed to Russia's war against Ukraine and the possibility of food shortages and the potential return of " stagflation," a toxic mix of high inflation and sluggish growth unseen for more than four decades.

The economy's fragility has been atop Wall Street's mind this year amid worries about interest-rate hikes coming from the Federal Reserve. The central bank is moving aggressively to stamp out the worst inflation in decades, but it risks choking off the economy if it moves too far or too quickly.

The Fed is widely expected to raise its key short-term interest rate by half a percentage point at its meeting next week. That would be the second straight increase of double the usual amount, and investors expect a third in July.

Treasury yields have largely climbed through this year with expectations for a more aggressive Fed. They moderated a bit on Tuesday, though.

The yield on the 10-year Treasury fell back to 2.98% from 3.03% late Monday. The two-year yield, which more closely tracks expectations for Fed action, dipped more modestly to 2.72% from 2.73%.

The next big update on inflation arrives Friday, when the U.S. government releases its latest reading on the consumer price index.

In other trading, benchmark U.S. crude oil added 78 cents to $120.19 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the standard for international trading, picked up 52 cents to $121.09 per barrel.

The U.S. dollar was trading at 133.79 Japanese yen, up from 132.61 yen. The euro slipped to $1.0682 from $1.0705.