By Ritvik Carvalho
LONDON (Reuters) - World stocks eked out meagre gains on Tuesday amid worries the global economy was faltering after data showed manufacturing activity slowed last month, weakening appetite for risk.
MSCI's All Country World Index (MIWD00000PUS), which tracks stocks in 47 countries, was higher by 0.05% by midday in London, up for a fourth straight day. Futures (ESc1) indicated a lower open for stocks on Wall Street.
Stocks had rallied globally on Monday after the United States postponed imposing another round of tariffs on Chinese products and the two countries agreed to continue negotiations on trade.
But investors were skeptical of further gains for equities after discouraging manufacturing surveys in the past 24 hours and a U.S. threat of additional tariffs on European goods.
(Graphic: Manufacturing slowdown - https://tmsnrt.rs/2FMzK82)
"It's clear that the tariffs already in place will continue to take a toll on global and domestic growth, and with Trump now turning his attention on Europe, the early bullish bias seems to ease again," said Konstantinos Anthis, head of research at ADSS.
The pan-European STOXX 600 index was up 0.25%, although plane maker Airbus (PA:AIR) dropped as much as 1% as the United States stepped up pressure in the long-running dispute over aircraft subsidies.
The U.S. Trade Representative's office released a list of additional products - including olives, Italian cheese and Scotch whiskey - that could be subject to tariffs, on top of products worth $21 billion that were announced in April.
"We've got the trade spat resurfacing between the U.S. and EU, which is reiterating Trump's protectionist stance on trade, and that is obviously not the kind of news you want to hear," said Florian Hense, European economist at Berenberg in London.
"The uncertainty about what could still come on trade causes confidence to fall and investors to hold back on their investment, which is a driver in markets today."
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) added 0.39%, helped by a 1.17% gain in Hong Kong shares (HSI) as investors caught up to Monday's global rally. Markets in Hong Kong had been closed on for a holiday.
But Chinese blue chips (CSI300) were flat and Korean shares (KS11) lost 0.36%. Japan's Nikkei (N225) finished up 0.11%.
Australian shares (AXJO) were flat, pulling back from earlier gains after the Reserve Bank of Australia cut its benchmark interest rate by 25 basis points to a record low 1.0%, as expected. However, the RBA left limited room for more cuts, raising the possibility of unconventional policy easing.
The Australian dollar
The safe-haven yen strengthened against the dollar, which fell 0.2% to 108.25 yen per dollar
The dollar index, which tracks the dollar against major rivals (DXY), was 0.1% lower at 96.749.
The euro got a brief boost after a media report that European Central Bank policymakers are in no rush to cut interest rates at a July policy meeting.
The single currency (EUR=EBS) edged up as much as 0.25% to the day's highs at $1.1322 before retracing some of its rise to stand 0.1% up on the day at $1.1300.
In debt markets, Italian government bonds rallied after Italy cut its 2019 budget deficit target to avoid European Union disciplinary action, potentially easing another major concern for markets.
Oil prices slipped as concerns that the global economy could be slowing outweighed an agreement by producer club OPEC on Monday to extend supply cuts until next March.
Brent crude (LCOc1) fell 0.34% to $64.84 per barrel. U.S. crude (CLc1) fell 0.3% to $58.92 a barrel.