US stocks gave up early gains on Tuesday while European markets also receded, as investors' hopes for a coronavirus recovery warred with lingering inflation fears and mixed economic data.
Although US central bankers have sought to play down expectations they could raise rates, "markets appear to be grappling with lingering Fed uncertainty amid the backdrop of rising inflation pressures, the recent calmness in the interest rate markets, and continued optimism of economic prosperity as vaccine rollouts continue," Charles Schwab analysts commented.
The Dow Jones Industrial Average and wider S&P 500 both fell slightly, while the tech-heavy Nasdaq was close to flat.
A US consumer confidence reading showed the public upbeat for now, but worried about the months ahead, with "expectations of decelerating growth and softening labor market conditions," said Lynn Franco, senior director of economic indicators at The Conference Board.
On the upside was positive news from Moderna on the effectiveness of its coronavirus vaccine in teenagers.
The US firm announced earlier Tuesday that its mRNA shot against Covid-19 was "highly effective" at preventing the disease in teenagers, and that it would apply for authorisation for the age group from US and global regulators "in early June".
In foreign exchange markets, the euro hit a five-month high against the dollar.
Bitcoin was lower again, continuing its recent rollercoaster ride where a supportive tweet from tycoon Elon Musk had helped offset fresh Chinese warnings of a crackdown on cryptocurrencies.
Meanwhile, oil prices gained slightly, against the backdrop of the talks between Iran, the US and other world powers aimed at reviving their 2015 nuclear agreement.
- German stocks top all-time high -
In Europe, Germany's DAX index touched a new all-time high of 15,568.60 points in the morning before easing back in the afternoon to close just 0.2 percent higher, while Paris and London each shed 0.3 percent.
Investors in Europe's top economy had been encouraged by "a combination of M&A (merger and acquisition) activity, upbeat business sentiment data and easing US inflation fears," said analyst Sophie Griffiths at trading firm OANDA.
Investors seized on an announcement from Germany's top property group Vonovia of a 19-billion-euro merger with rival Deutsche Wohnen to form a sector giant.
Sentiment was also boosted by surging German business confidence.
The Ifo institute's monthly barometer based on a survey of 9,000 companies climbed to 99.2 points in May, 2.6 points up from April and its highest value in two years.
- Key figures around 1600 GMT -
New York - Dow: DOWN 0.1 percent at 34,356.69 points
London - FTSE 100: DOWN 0.3 percent at 7,029.79 (close)
Paris - CAC 40: DOWN 0.3 percent at 6,390.27 (close)
Frankfurt - DAX 30: UP 0.2 percent at 15,465.09 (close)
EURO STOXX 50: FLAT at 4,036.04
Tokyo - Nikkei 225: UP 0.7 percent at 28,553.98 (close)
Hong Kong - Hang Seng Index: UP 1.8 percent at 28,910.86 (close)
Shanghai - Composite: UP 2.4 percent at 3,581.34 (close)
Euro/dollar: UP at $1.2234 from $1.2216 at 2100 GMT on Monday
Pound/dollar: DOWN at $1.4124 from $1.4157
Euro/pound: UP at 86.64 pence from 86.29 pence
Dollar/yen: FLAT at 108.96 yen
Brent North Sea crude: UP 0.3 percent at $68.63 per barrel
West Texas Intermediate: UP 0.2 percent at $66.19 per barrel