Stocks hovered just above bear market territory on Monday as economic fallout from the war in Ukraine and persistently high inflation capped gains in equity benchmarks.
Oil rose, gold extended its recent gains, but the dollar slipped as investors cut their bets on further advances in the US currency from rising interest rates.
Investors in Europe drew comfort from the S&P 500 index on Wall Street ending Friday just clear of bear market territory, meaning down 20 per cent from its January 3 record high close.
The MSCI all country index was up 0.16 per cent, still down nearly 18 per cent from its record high in January.
The S&P index suffered its seventh successive weekly fall for the first time since the dotcom bubble burst in 2001, Deutsche Bank said in a note.
"For what it's worth the Dow saw the first successive 8th weekly decline since 1923 which really brings home the state of the current sell-off," Deutsche Bank said.
S&P 500 futures were up 0.7 per cent, indicating a steady open in New York, though analysts sounded a note of caution.
"I don't think we have reached rock bottom yet, it's a bear market rally. The market is still pretty concerned about sticky inflation," said Michael Hewson, chief markets analyst at CMC Markets.
The STOXX index of 600 European companies rose 0.7 per cent to 435.7 points, down about 13 per cent from its January record high.
US stock markets have been harder hit than Europe because they were more overvalued, and the US Federal Reserve is being more aggressive in prioritising the fight against inflation over other factors, Hewson said.
"We haven't had that extent of hawkishness from the Bank of England or the European Central Bank, and I think that's why the losses in Europe have been slightly more modest," Hewson said.
ECB President Christine Lagarde said on Monday there could be an interest rate "lift-off" at its meeting in July.
European resilience was highlighted by Germany's Ifo business climate index for March unexpectedly rising to 93 in May, defying market expectations of a fall to 91.4.
"The gradual return of optimism continues but only if the focus is limited to the very short run," ING bank said.
The German DAX blue chip index was up 1.0 per cent.
The World Economic Forum holds its first in-person meeting in two years in Davos, Switzerland over the coming four days, with central bankers and the International Monetary Fund participating in panels on the outlook for economies and inflation.
The dollar index, which tracks the US unit against a basket of currencies of other major trading partners, was down 0.3 per cent at 102.60. The index rose by about 16 per cent to a two-decade high over the 12 months to mid-May.
"The dollar may be carving out a peak, given Europe's resilience to the energy shock and potential easing of lockdowns in China," said Commonwealth Bank of Australia strategist Joe Capurso.
The benchmark 10-year Treasury yield rose to 2.8045 per cent from its US close of 2.787 per cent on Friday. Euro zone government bond yields also edged higher.
The two-year yield, which rises with traders' expectations of higher Fed fund rates, rose to 2.6037 per cent.
Asian stocks fell as investors worried inflation and rising interest rates would hamper the global economy's performance.
MSCI's broadest index of Asia-Pacific shares outside Japan was slightly weaker.
US crude gained 1.0 per cent to $111.43 a barrel as the peak US holiday season driving looms. Brent crude rose 1.15 per cent to $113.85 per barrel.
The concerns over global economic growth have prompted renewed support for gold.
"Gold prices saw the first weekly gain since mid-April as safe-haven demand was boosted by concerns over economic growth amid high inflation," ANZ analysts said in a research note on Monday.
"A weaker US dollar has also boosted investor appetite."
Spot gold was 0.6 per cent higher at $1,857.8 per ounce.
Australian Associated Press
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