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| - European and US stock markets mostly extended gains Tuesday despite Asian losses as investors assessed the outlook for global interest rates, dealers said. Equities rebounded Monday from last week's heavy selloff on easing US money market rates as inflation fears faded and investors were encouraged by progress on coronavirus vaccine rollouts and President Joe Biden's $1.9-trillion stimulus package advanced towards passage. Europe's main indices were all in the green in afternoon trading, and on Wall Street both the Dow and S&P 500 opened higher after stellar gains on Monday. Despite the gains, Michael Hewson at trading firm CMC Markets UK said investors "are trading more cautiously". That was echoed by Stephen Innes at Axi. "As opposed to yesterday's 'risk-on' sprint, it feels like we've dropped to a marathon pace," he said in a note to clients. The rise in yields on government bonds in the US and other key economies last week sparked a market meltdown which was exacerbated by profit-taking. Higher yields had prompted worries about a sudden shift in monetary policy toward higher interest rates. However, a stabilisation in the bond market on Friday and Monday appears to have staunched the bleeding for now and analysts said worries over a surge in inflation and rate hikes have been overdone. Innes said economic data largely justifies the rise in bond yields, but there remains a certain reticence by investors despite assurances by central banks that ultra low interest rates are here to stay for forseeable future. "Markets are finding it difficult to shake the bond market heebie-jeebies suggesting investors believe last week's move likely has more substance behind it than just a flash crash on a go-slow," said Innes. News Tuesday of steady eurozone inflation sent the European single currency briefly below $1.20 for the first time in three weeks as it too dampened speculation about higher interest rates. The Eurostat agency said inflation in the 19 countries that use the euro ran at 0.9 percent last month, the same as in January. In Asia Tuesday, equities sank after a top Chinese regulator raised concerns that bubbles were forming in the financial markets. US and European markets were not reflective of their underlying economies and would face corrections "sooner or later", said China Banking and Insurance Regulatory Commission chairman and central bank member Guo Shuqing. Guo's comments come after a number of observers warned equities were due a retreat following a year-long advance from their March 2020 nadir. "Asia markets have slipped back today after Chinese regulators warned on the prospect of asset bubbles in overseas markets," added Hewson. "This is hardly a new phenomenon; there's been talk about bubbles in US markets for months and China's property market isn't immune to these sorts of concerns either." In commodities, oil prices rose ahead of a key OPEC+ producer meeting later this week. London - FTSE 100: UP 0.6 percent at 6,630.70 points Frankfurt - DAX 30: UP 0.6 percent at 14,089.86 Paris - CAC 40: UP 0.6 percent at 5,825.54 EURO STOXX 50: UP 0.4 percent at 3,722.13 New York - Dow: UP 0.2 percent at 31,587.39 Tokyo - Nikkei 225: DOWN 0.9 percent at 29,408.17 (close) Hong Kong - Hang Seng: DOWN 1.2 percent at 29,095.86 (close) Shanghai - Composite: DOWN 1.2 at 3,508.59 (close) Euro/dollar: DOWN at $1.2045 from $1.2049 at 2200 GMT Pound/dollar: UP at $1.3928 from $1.3925 Euro/pound: DOWN at 86.46 pence from 86.53 pence Dollar/yen: UP at 106.84 yen from 106.76 yen Brent North Sea crude: UP 0.4 percent at $63.97 per barrel West Texas Intermediate: UP 0.6 at $60.00 per barrel burs-rl/lth
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