Asian and European stocks wavered on Thursday as traders digested recession risks and slowing inflation in the United States, and pored over earnings.

US inflation slowed sharply in March to five per cent, data showed on Wednesday, but minutes from the Federal Reserve's most recent policy meeting indicated officials foresaw a recession at the end of the year.

"Investors are weighing up an improving picture for US inflation... versus fears of a recession stateside," said Victoria Scholar, head of investment at trading firm Interactive Investor. "US central bank policymakers are concerned about the negative economic fallout from the recent turmoil in the banking sector."

London stocks flatlined on Thursday as data showed the UK economy unexpectedly stalled in February.

UK supermarket giant Tesco topped the risers, gaining 2.4 per cent as news of a share buyback eclipsed news that net profits halved at Britain's biggest retailer last year on soaring inflation.

In the eurozone, Frankfurt stocks drifted lower but Paris jumped 0.9 per cent to strike a fresh record-high.

Shares in French luxury giant LVMH leapt 4.1 per cent after the maker of champagne and expensive fashion logged an "excellent" first quarter after the close of trading on Wednesday.

In the US, the inflation reading was the lowest since May 2021, sparking hope that the Fed could soon end its policy of aggressive interest rate hikes.

Traders were awaiting the release of US wholesale inflation later on Thursday. That will be followed by crucial first-quarter earnings on Friday from top banks including JPMorgan and Citibank.

"For weeks it's all about the trajectory of inflation and subsequent interest rate hikes for investors," noted Nigel Green, head of financial consultancy deVere Group. "But the focus is now shifting to earnings season.

"The big banks will be keenly watched as not only do they often set the mood music for the rest of the season, but also because they are more intricately linked to the rest of the economy than most other sectors," Green added.

The big banks will be keenly watched as they often set the mood music for the rest of the season [and] because they are intricately linked to the rest of the economy- Nigel Green, head of financial consultancy deVere Group

Wall Street turned negative on Wednesday after the release of Fed minutes that highlighted fears over the impact of last month's banking crisis in which three US lenders went bust and Credit Suisse was taken over.

Asian markets ended mixed on Thursday after a downbeat start. Hong Kong edged up despite sharp losses in the tech sector that came after the Financial Times reported that Japan's SoftBank was looking to unload a majority of its holdings in Alibaba.

News that Chinese exports soared for the first time in six months, by a forecast-busting 14.8 per cent, was unable to provide much lift to sentiment.

Oil prices dipped but held most of Wednesday's two per cent rally fuelled by a drop in US inventories and supply issues from Iraqi Kurdistan. The two main contracts are now sitting around levels not seen since November, while traders are awaiting an outlook from crude exporters' cartel OPEC.

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