By Huw Jones
LONDON (Reuters) - Global stocks gained on Wednesday as early indications of a rebound in European corporate earnings offset concerns over rising COVID-19 infections in Asia that have dampened oil prices.
The STOXX index of 600 European shares was up 0.7% at 436.76 points. Analysts said a 1.9% fall on Tuesday, its worst session this year, was overdone and the benchmark remains near its record high of 443.61 points hit on Monday.
MSCI's index of global shares fell 0.2%. It too had reached record highs on Monday.
"We have seen seven weeks or so of gains predicated on the recovery trade," said Michael Hewson, chief markets analyst at CMC Markets.
"It was priced to perfection and with events in Japan and India ahead of earnings, maybe there were going to be a few potholes along the way, a little bit of risk correction," Hewson said.
Recent optimism about rising vaccination rates in the United States, Britain and the European Union is shifting to concern that record coronavirus infections in India and a reinforcement of travel restrictions will act as a brake on the world economy.
Stocks in Tokyo also slumped by 2% due to the growing likelihood that Tokyo, Osaka and surrounding areas will be put under lockdown due to a new wave of coronavirus infections.
Europe kicked off an earnings season that is expected to deliver 61% profit growth, its biggest surge in more than nine years, on the back of recovery from economic lockdowns.
Tech stocks were the top gainers, up almost 2%, withsemiconductor equipment maker ASML jumping 5.4% afterit raised its full-year sales forecast, citing strong demandamid a global computer chip shortage. But Italian football club Juventus slumped 10% after the breakaway European Super League was rocked by the departure of its six English clubs.ections.
Crude futures extended declines from a one-month high on speculation that coronavirus restrictions in India, the world's third-largest oil importer, will hurt energy demand.
U.S. crude dipped 0.4% to $62.44 a barrel, while Brent crude fell 0.2% to $66.40 per barrel.
"Renewed concerns about the global economic recovery weighed on commodity prices and commodity currencies. Many countries around the world, such as India and Brazil, set new records for infections and deaths," analysts at Commonwealth Bank of Australia (OTC:CMWAY) said in a research note.
Analysts said they were looking for steers from the European Central Bank on Thursday, followed by the Federal Reserve and Big Tech earnings on Wall Street next week.
NETFLIX SLUMP
S&P 500 e-mini stock futures were slightly firmer, indicating a potential modest rebound from Tuesday's selloff on Wall Street.
The Dow Jones Industrial Average fell 0.75%, the S&P 500 lost 0.68%, and the Nasdaq Composite fell 0.92% on Tuesday as investors sold airlines and travel-related shares due to fear of a delayed recovery in global tourism.
Some tech shares and companies that benefited from stay-at-home demand could face further pressure on Wednesday after Netflix Inc (NASDAQ:NFLX) reported disappointing subscriber growth for its movie streaming service, which sent its shares down 11% in after-hours trading.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1%. Australian stocks dropped 0.3% but shares in China recouped early losses and rose 0.3% due to positive earnings from the healthcare and banking sectors.
The dollar index against a basket of six major currencies traded 0.2% higher at 91.358.
Investors are closely watching an auction of 20-year U.S. Treasuries later on Wednesday, which will be an important gauge of global demand for fixed income.
Ahead of the auction results, the yield on benchmark 10-year Treasury notes traded at 1.5767%, near a six-week low.
In a sign of growing risk aversion, spot gold traded at $1,781.40 per ounce, close to a seven-week high reached on Monday. [GOL/]