Wall Street stocks ended with gains Wednesday, retracing some of the losses from one day earlier driven by stronger-than-expected US inflation data that sparked fears of more Federal Reserve interest rate hikes.
The S&P 500 rose 0.3 percent. The dollar edged down in choppy trade, as oil prices climbed.
The US inflation data still pulled European and Asian equities sharply lower, London the heaviest faller in Europe after news that UK inflation had slowed last month but remained close to a 40-year high.
US shares were battered Tuesday by the consumer price index data showing widespread inflation pressures, and though the annual CPI pace slowed in August, prices unexpectedly increased in the month compared to July.
The disappointing result left investors bracing for the Federal Reserve to continue its tough anti-inflation fight with another massive interest rate hike next week.
Investors "got crushed yesterday, because the inflation outlook wasn't as good as we thought and the Fed is probably going to have to raise rates more than they thought over the cycle," said Karl Haeling of LBBW.
But Tuesday's sell off was "so big, that you're getting a little bit of a technical bounce today. And that's it," he told AFP.
- Hope for inflation? -
Data Wednesday charting only a modest slowing in the producer price index due to falling energy costs showed inflation in the pipeline remains elevated, but offered hope for the months ahead.
The drop "suggests that inflation pressures are moderating albeit not as quickly as one would like," said market analyst Michael Hewson at CMC Markets.
Global consumer prices have soared for months, exacerbated by Russia's invasion of Ukraine -- which has hiked energy and food costs -- as well as owing to supply chain strains and Covid lockdowns in China.
The Fed has already instituted two consecutive 75-basis-point hikes, and a third such move is widely expected at its policy meeting next week.
After the latest US inflation data, some investors are even predicting the next Fed hike could be a full percentage point.
Aggressive rate tightening by central banks worldwide is denting economic activity as consumers and businesses face higher loan repayments.
In the UK, inflation slowed to 9.9 percent in August but remained almost in double digits.
The news boosted the pound on hopes of another interest rate hike next week from the Bank of England.
European markets are "caught up in the negative sentiment that has taken hold across global markets," said Victoria Scholar, head of investment at Interactive Investor.
In Asia, Tokyo led the region's losses with the Nikkei plunging 2.8 percent.
Hong Kong stocks closed down more than two percent, with Chinese conglomerate Fosun hit hard by media reports that the group was under regulatory scrutiny.
- Key figures at around 2100 GMT -
New York - Dow: UP 0.1 percent to 31,135.09 points (close)
New York - S&P 500: UP 0.3 percent to 3,946.01 (close)
New York - Nasdaq: UP 0.7 percent to 11,719.68 (close)
EURO STOXX 50: DOWN 0.5 percent at 3,567.86 (close)
London - FTSE 100: DOWN 1.5 percent at 7,277.30 (close)
Frankfurt - DAX: DOWN 1.2 percent at 13,028.00 (close)
Paris - CAC 40: DOWN 0.4 percent at 6,222.41 (close)
Tokyo - Nikkei 225: DOWN 2.8 percent at 28,818.62 (close)
Hong Kong - Hang Seng Index: DOWN 2.5 percent at 18,847.10 (close)
Shanghai - Composite: DOWN 0.8 percent at 3,237.54 (close)
Euro/dollar: UP at $0.9972 from $0.9970 late Tuesday
Pound/dollar: UP at $1.1532 from $1.1493
Euro/pound: DOWN at 86.46 pence from 86.75 pence
Dollar/yen: DOWN at 142.20 yen from 144.58 yen
Brent North Sea crude: UP 0.9 percent at $94.10 per barrel
West Texas Intermediate: UP 1.3 percent at $88.48 per barrel