By Marc Jones
LONDON (Reuters) - World shares stalled near a five-month high on Tuesday as China cut its growth targets to a 30-year low but added more stimulus, and a revived dollar headed for a fifth day of gains in the currency markets.
Brighter German and French data had initially lifted Europe's STOXX 600 index, though with Italy also confirmed back in recession and new money laundering woes weighing on the banking sector, there was little in the way of fresh energy.
Wall Street futures were just about holding in positive territory but after a near 20 percent rally for the S&P 500 since late December and trade, political and monetary policy uncertainty in plentiful supply, traders were eyeing a rest.
Asia had also struggled overnight after Beijing took the widely expected step to lower its growth target to 6 to 6.5 percent from last year's 6.5 percent at the National People's Congress.
Japan's Nikkei and South Korea's Kopsi both reversed despite weaker domestic currencies, though Chinese stocks actually made ground as Premier Li Keqiang announced nearly 2 trillion yuan ($298.31 billion) of cuts in taxes and company fees.
Authorities in Beijing also said they were stepping up efforts to encourage big banks to lend more.
"You have had positive news on trade and positive news on the Federal Reserve (pausing rate hikes), so you have had less to worry about, but what hasn't really gone away is this slowdown in global growth," JP Morgan Asset Management strategist Mike Bell said.
In currency markets, the dollar continued its recent return to form just as other major central banks have turned more cautious about lifting interest rates again, similar to the way the Federal Reserve did at the start of the year.
The euro slipped 0.1 percent to $1.1330 , amid expectations the European Central Bank will prepare the ground for more ultra-cheap long-term funding at its policy meeting on Thursday.
The dollar rose 0.2 percent to 111.93 yen to stay near Friday's 10-week high of 112.08, while the Canadian dollar slid to near six-week lows after Prime Minister Justin Trudeau was hit by cabinet resignations and bets Canada's central bank is also about to change tack.
"The Bank of Canada are probably at the place where they are starting to feel concerned," Charles St Arnaud, a senior investment strategist at Lombard Odier, said.
BREATHER
Britain's pound was stuck back below $1.32 despite better than expected services sector data. Australia's dollar fell 0.2 percent to $0.7072 after weak exports figures suggested its economy came close to stalling last quarter.
Wall Street's major indexes were poised for a mostly steady start after falling modestly on Monday - which traders had put down to an unexpected decline in U.S. construction spending, data that normally attracts little attention.
Fatigue is clearly playing a role, though. MSCI's All Country World Index ,which covers 47 economies and thousands of individual stocks, has now risen 16 percent from its near two-year low on Dec. 26.
It was barely budging on Tuesday in the various cross currents, but the index is now trading at 14.6 times expected earnings, on par with levels back in early October when a global bear market began to take hold.
(Graphic: Global stock valuations link: https://tmsnrt.rs/2VHHkGL).
Eoin Murray, Head of Investment at Hermes Investment Management, said the range-bound moves of recent days showed markets were now "in no-man's land" and in need of fresh direction after their early year spurt.
A media report on Monday had said that U.S. President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around March 27, but Murray's expectation is that tariffs will be maintained at current levels - not increased but not removed as some economists hoped.
Trump looked to have already opened a new front on Monday with plans to end preferential trade treatment for Turkey and India. India's current arrangement allows duty-free entry for up to $5.6 billion worth of its exports to the U.S.
Turkey's lira and India's rupee didn't really react but on the U.S.-China hopes, Hermes' Murray added the issues being worked toward are "just the pinnacle of a very large iceberg."
Commodity markets were also in flux after a strong start to 2019.
Gold was on course for a fifth straight day of declines, putting it at $1,285 an ounce, marking its worst run since November, while oil drifted down before perking back up before U.S. trading.
U.S. crude futures, which are up a third since the end of last year, stood at $56.74 per barrel, while international benchmark Brent futures were 0.2 percent better off at $65.83 per barrel.