Traders will weigh earnings from big-ticket firms including Microsoft and Intel

London (AFP) - European and US stocks seesawed on Tuesday as investors weighed the chances of a global recession this year and more companies report earnings.

Equities have performed strongly since the start of the year as China’s economy reopens from strict lockdowns, energy prices ease, and hopes rise that a severe downturn can be averted even if inflation remains high and interest rates keep rising, albeit at a slower pace.

“There is a twinge of nervousness setting in that the stock market has gotten ahead of itself and is due for a pullback,” said market analyst Patrick O’Hare at

Wall Street’s three main indices all opened 0.5 percent lower but recovered their losses in late morning trading after a closely watched survey showed improvement in the US private sector.

The S&P Global Flash US Composite PMI rose from 45.0 points last month to 46.6 in January. A figure below 50 indicates contraction.

European indices failed to gain much traction from the comparable eurozone index rising to 50.2 in January from 49.3 in December.

While the overall result bolsters hopes that Europe will avoid a recession this winter, on a national level the data wasn’t so rosy.

“Although the latest European PMI numbers beat expectations, the upside surprise was minimal and there were some downside surprises on a country level, with French and UK services, and German manufacturing all disappointing expectations,” said market analyst Fawad Razaqzada at City Index and

Paris stocks ended the day up 0.3 percent while Frankfurt dipped less than a tenth of a percent.

London, where the services PMI sank to a two-year low, shed 0.4 percent.

At the same time, heavy fallout from lingering high energy costs was further evidenced Tuesday with data showing UK government debt ballooning further in December as it subsidises gas and electricity bills for households and businesses.

“The impact of sky-high energy prices isn’t just being felt by households and businesses, it’s also taking a big bite out of the UK’s public finances,” said AJ Bell analyst Danni Hewson.

- Tokyo shines -

In Asia, Tokyo stocks rose in another day of thin trade due to the Lunar New Year break.

Hopes that the Federal Reserve will slow down its pace of interest rate hikes have given investors optimism in recent days that the US economy could avert a recession, or at least suffer only a mild contraction.

While the year has started on a positive note, BlackRock Investment Institute warned that markets were “vulnerable to negative surprises – and unprepared for recession”.

Companies are in the midst of reporting earnings for the past quarter, with investors in particular looking for information on how firms expect this year will turn out.

General Electric, Lockheed Martin and Raytheon all reported results before trading got under way. Microsoft reports after the closing bell.

“There will be a lot of attention on those results, the growth rates for Microsoft’s business lines, and any guidance the company provides,” O’Hare said.

Oil prices fell.

“Having risen for two weeks in a row, crude oil prices have slipped back from six-week highs, as uncertainty about how much of a demand boost we’ll see and concerns over a weakening US economy constrains the upside,” said market analyst Michael Hewson at CMC Markets.

- Key figures around 1630 GMT -

New York - Dow: UP 0.1 percent at 33,669.26 points

EURO STOXX 50: UP less than 0.1 percent at 4,153.02

London - FTSE 100: DOWN 0.4 percent at 7,757.36 (close)

Frankfurt - DAX: DOWN less than 0.1 percent at 15,093.11 (close)

Paris - CAC 40: UP 0.3 percent at 7,050.48 (close)

Tokyo - Nikkei 225: UP 1.5 percent at 27,299.19 (close)

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Euro/dollar: UP at $1.0884 from $1.0877 on Monday

Pound/dollar: DOWN at $1.2333 from $1.2374

Euro/pound: DOWN at 88.24 pence from 88.47 pence

Dollar/yen: DOWN at 129.90 yen from 130.66 yen

Brent North Sea crude: DOWN 1.7 percent at $88.72 per barrel

West Texas Intermediate: DOWN 1.5 percent at $80.41 per barrel