Volkswacht Bodensee - Stocks diverge as US rally loses steam

Tokyo closed up two percent and eurozone indices neared gains of one percent in early afternoon deals, one day after a closely watched gauge of US consumer confidence hit its highest level since January last year.

Other data showed new home sales surged in May and orders for big-ticket manufactured items rose again.

The data tempered fears that the world's top economy could tip into recession because of more than a year of interest rate hikes by the US Federal Reserve as it battles inflation.

But Wall Street opened lower on Wednesday after rallying the previous day.

Reports that Washington could block the export of artificial intelligence chips to China weighed on sentiment.

Shares in Nvidia, whose chips are particularly prized for use in computers working on artificial intelligence, fell by 2.9 percent. Shares in Intel shed 1.7 percent.

Traders will be keeping tabs on a gathering of central bankers in Portugal, including US Federal Reserve chief Jerome Powell, for any statements about further interest rate hikes.

"It is likely... that Mr Powell and his colleagues will be emphasizing the point that inflation is still too high and that more work needs to be done to get inflation back down to target," said Briefing.com analyst Patrick O'Hare.

Italian Prime Minister Giorgia Meloni on Wednesday criticised the European Central Bank over its hiking of rates, warning "the cure risks proving more damaging than the disease".

Meloni was reacting to ECB President Christine Lagarde's warning Tuesday that the bank would "continue to increase rates in July" unless there was "a material change to the outlook".

The ECB has lifted borrowing costs at the fastest pace ever over the past year in a bid to cool inflation after Russia's war in Ukraine sent energy and food prices surging.

While sky-high energy prices that drove inflation up last year have come down, ECB officials are now concerned about the impact of rising wages as workers demand higher salaries to cover rising costs.

Oil prices pushed tentatively higher but then turned lower again.

Market analyst Craig Erlam at OANDA trading platform noted that oil prices have approached their multi-month lows a number of times without breaching the level.

This "suggests we are potentially in a prolonged period of consolidation, with little sign yet of further downside momentum building," he said.

OPEC and its allies have cut back oil production to support prices but recession worries have kept gains in check.

- Key figures around 1330 GMT -

New York - Dow: DOWN 0.2 percent at 33,860.11 points

London - FTSE 100: UP 0.6 percent at 7,508.80

Frankfurt - DAX: UP 0.7 percent at 15,957.45

Paris - CAC 40: UP 0.7 percent at 7,268.57

EURO STOXX 50: UP 0.7 percent at 4,336.49

Tokyo - Nikkei 225: UP 2.0 percent at 33,193.99 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 19,172.05 (close)

Shanghai - Composite: FLAT at 3,189.38 (close)

Euro/dollar: DOWN at $1.0951 from $1.0964 on Tuesday

Pound/dollar: DOWN at $1.2640 from $1.2748

Dollar/yen: UP at 144.27 yen from 144.06 yen

Euro/pound: UP at 86.51 pence from 85.95 pence

Brent North Sea crude: DOWN 0.6 percent at $71.82 per barrel

West Texas Intermediate: DOWN 0.6 percent at $67.33 per barrel

burs-rl/lth

S.Keller--BTB