Geopolitics keep stock markets cautious

Markets worry about Syria as G7 foreign ministers throw their support behind Rex Tillerson as he prepares for crunch talks in Moscow

World stock markets drifted in subdued trading on Tuesday as investors remained cautious following last week's Syria strike and saber-rattling on the Korean peninsula.

London outperformed its peers as the market digested news that Britain's inflation rate held at a 3.5-year peak in March.

The London stock index climbed 0.2 percent, while Frankfurt and Paris both closed lower.

"Cautious investors are heading for the sidelines amid geopolitical uncertainty in the Middle East, the Korean Peninsula and the upcoming French election all contributing to dampen sentiment and risk appetite ahead of the long (Easter) weekend break," said Andy McLevey at online stockbroker Interactive Investor.

US stocks also declined, although the Dow fought back nearly to level after a choppy session.

"The market was down earlier on geopolitical tensions," said Jack Ablin, chief investment officer at BMO Private Bank. "But there's still a lot of cash on the sidelines hoping to get in."

US Secretary of State Rex Tillerson flew to Moscow Tuesday to confront the Kremlin about its support for the Syrian government, amid US statements that Russia tried to cover up a chemical attack.

In France, polls currently suggest potential for a May 7 runoff between far-right leader Marine Le Pen and centrist Emmanuel Macron, who is still tipped to clinch the presidency.

But analysts are monitoring the rise of Communist-backed Jean-Luc Melenchon, who has built momentum after climbing into third place in the polls.

The price of gold, a safe haven investment, reached a five-month high, while the Japanese yen, another refuge, also rose strongly.

The dollar, meanwhile, retreated after US Federal Reserve Chair Janet Yellen late Monday repeated once again that the central bank would stick to its plans to raise interest rates only gradually.

Among individual stocks, United Continental dropped 1.2 percent as chief executive Oscar Munoz apologized for the forcible removal of a bloodied passenger from an overbooked flight.

The more lengthy statement of regret followed a shorter Munoz comment on the incident Monday, which did little to stem the intense public outrage and ridicule of the airline after a video showing the encounter went viral.

- Key figures at 2100 GMT -

New York - Dow: DOWN less than 0.1 percent at 20,651.30 (close)

New York - S&P 500: DOWN 0.1 percent at 2,353.78 (close)

New York - Nasdaq: DOWN 0.2 percent at 5,866.77 (close)

London - FTSE 100: UP 0.2 percent at 7,365.50 (close)

Frankfurt - DAX 30: DOWN 0.5 percent at 12,139.35 (close)

Paris - CAC 40: DOWN 0.1 percent at 5,101.86 (close)

EURO STOXX 50: DOWN 0.3 percent at 3,469.37

Tokyo - Nikkei 225: DOWN 0.3 percent at 18,747.87 (close)

Hong Kong - Hang Seng: DOWN 0.7 percent at 24,088.46 (close)

Shanghai - Composite: UP 0.6 percent at 3,288.97 (close)

Euro/dollar: UP at $1.0606 from $1.0596

Pound/dollar: UP at $1.2492 from $1.2412

Dollar/yen: DOWN at 109.65 yen from 110.89 yen

Oil - West Texas Intermediate: UP 32 cents at $53.40 per barrel

Oil - Brent North Sea: UP 37 cents at $56.23 per barrel