World shares steadied on Tuesday after a late revival on Wall Street, although global growth fears stoked by China's COVID-19 curbs and fears of aggressive Fed tightening sapped risk appetite, lifting the dollar to new two-year highs.
The MSCI world equity index rose 0.1 per cent from six-week lows by 0812 GMT, helped by a gain of 0.7 per cent in Europe's STOXX 600 index on strong earnings by companies such as bank UBS and shipping group Maersk.
However, China's blue chip index fell another 0.8 per cent after its worst day in two years on Monday, even as the central bank vowed to step up prudent monetary policy support, particularly for small firms hit by COVID-19.
Three-quarters of Beijing's 22 million people lined up for COVID-19 tests as the Chinese capital raced to stamp out a nascent outbreak and avert the city-wide lockdown that debilitated Shanghai for a month.
News that Elon Musk had clinched a deal to buy Twitter for $US44 billion ($A61 billion) in cash buoyed tech stocks. Hong Kong's tech sector rallied 2.3 per cent, boosted by large firms such as Tencent and Alibaba.
The nervousness about China's economic slowdown hit Australian shares, with a drop of 2.1 per cent in the benchmark index , hurt particularly by declines in miners.
US stock futures fell slightly in European morning trade, pointing to losses of 0.6 per cent for the Nasdaq and of 0.5 per cent for the S&P 500 following strong late gains on Monday.
If the lockdown situation persists, it will affect China's economy significantly, with an impact on global supply chains, said Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas.
Lockdown dragged into a fourth week in China's financial hub of Shanghai, as authorities stick to a "dynamic zero-COVID" policy to combat the latest Omicron outbreak.
Markets have also been fretting that an aggressive pace of tightening by the US Fed could derail the global economy, which has only just started to recover from the pandemic.
The Fed is expected to raise rates by a half a percentage point at each of its next two meetings.
"It is unrealistic to think that the US can raise interest rates in this way without looking at the real economy," said Carlo Franchini, head of institutional clients at Banca Ifigest, adding that he was also worried about hawkish signals in Europe.
The European Central Bank's Martins Kazaks joined a chorus of policymakers urging swift exit from stimulus, suggesting the bank should raise rates soon, and has room for up to three hikes this year.
"A rate hike right now would be madness ... it would just squeeze demand further, reducing reduce consumption and drive the economy into stagflation, which in my view is a much more likely scenario than you might think," Franchini added.
In currency markets, the dollar was in fine fettle on safe-haven demand. The dollar index against a basket of rivals rose to fresh two-year highs and was last up 0.2 per cent at 101.9.
China's offshore yuan fell 0.2 per cent to 6.5832 per dollar, but stayed above Monday's year-low of 6.609 after the People's Bank of China said it would cut the amount of foreign exchange banks must hold as reserves.
Benchmark US 10-year yields ticked up 1 basis point to 2.829 per cent after retreating on Monday from hawkish Fed-induced highs, as the China lockdown and growth fears sent investors to the safety of US bonds.
Oil prices sought to steady after the previous session's sharp fall of four per cent. Worries over China's fuel demand were soothed by the central bank's pledge to support an economy hit by renewed COVID-19 curbs.
Brent crude fell 0.05 per cent to $US102.27 ($A141.58) per barrel, while US crude dipped 0.2 per cent to $US98.33 ($A136.12) a barrel.
Spot gold fell 0.1 per cent to $US1,896 ($A2,625) an ounce.