Europe's stocks recovered somewhat on Monday as investors tentatively regained some optimism following the heavy losses in the financial markets last week on fears that rising interest rates could spark recession.
London stocks won 1.1 per cent at midday, while Frankfurt and Paris gained 0.5 per cent and 1.0 per cent respectively in afternoon deals.
Tokyo and Shanghai also advanced but Hong Kong nudged lower. The dollar traded mixed while oil prices were subdued.
'Sliver of optimism'
"A sliver of optimism has broken through on global markets at the start of the week," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Europe's investors on Friday absorbed news of record-high eurozone inflation that reinforced expectations of a European Central Bank interest rate hike in July.
Markets have suffered sharp losses in recent weeks on fears that global rate hikes – aimed at fighting soaring inflation – could send economies into a downturn.
"Overall caution is still the name of the game as investors nurse wounds from a bruising first half of the year," Streeter said.
Overall caution is still the name of the game as investors nurse wounds from a bruising first half of the year- Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown
Wall Street meanwhile remains shut for the Independence Day holiday on Monday.
City Index analyst Fawad Razaqzada cautioned that global markets might yet have further to fall.
'Pinch of salt'
"Nothing has changed fundamentally to suggest the markets have bottomed out," Razaqzada told AFP.
"It is a quiet day with the US out and economic calendar light. So anything we see today should be taken with a pinch of salt."
Back in Asia, data showing a flare-up of fresh COVID-19 cases in China revived concerns about the government's policy of locking down towns and cities to eradicate the disease, despite the economic cost.
The jump in new COVID cases weighed on sentiment among investors who fear a return to the painful lockdowns in major cities including Shanghai, which hammered the world's number-two economy.
In a sign of the struggle officials will have in controlling rising prices, data showed on Friday that eurozone inflation hit a record 8.6 per cent in June.
The European Central Bank is due to lift rates this month for the first time in more than a decade.