GLOBAL MARKETS-European shares strengthen, but tech stocks under pressure


* Reuters Live Markets blog:

* Graphic: Global asset performance

* Graphic: World FX rates

LONDON, Feb 24 (Reuters) – European shares opened generallyhigher on Wednesday but world shares remained in the red after aweak Asian session, even after Fed Chair Jerome Powell pushedback against inflation fears.

Falling tech stocks pulled Asian markets lower overnight, asrecent gains in U.S. Treasury yields put lofty valuations underpressure.

In his testimony before the U.S. Senate, Federal ReserveChair Jerome Powell did not seem too worried about risingyields, telling Congress they were a statement on the market’sconfidence in the pandemic recovery.

The 10-year U.S. Treasury yield edged back down below itsrecent one-year high, although it rose as European marketsopened.

“Powell’s comments reinforce our view that the increase ininflation expectations is most likely transitory and that higherTreasury yields primarily reflect optimism over the economicrecovery and the reflation trade,” wrote UBS chief investmentofficer for global wealth management, Mark Haefele, in a note toclients.

“Investors should expect an extended period in whichinterest rates remain below inflation.”

Europe’s STOXX 600 rose in early trading, up 0.1% at 0843GMT, Germany’s DAX was up 0.4%, but London’sFTSE 100 was down 0.7%.

The MSCI world equity index, which tracksshares in 49 countries, was down 0.4%, having lost 2.3% since itlast hit an all-time high on Feb. 16.

U.S. futures pointed to a weaker open for Wall Street, with futures for the tech-heavy Nasdaq in decline forthe seventh consecutive day.

Tech stocks are particularly sensitive to rising yieldsbecause their value rests heavily on earnings in the future,which are discounted more deeply when bond returns go up.

Bitcoin recovered somewhat, up 3.3% at around $ 50,500 at0846 GMT, but was still down 13.5% from the all-time high above$ 58,000 it reached on Sunday.

“I suspect we are in a bubble in certain places, thatstimulus cheques will provide more fire to that at some pointbut that risk assets are going to be constantly buffeted by therisk of higher yields and inflation regardless of whether it hasany structural roots or not,” wrote Deutsche Bank strategist JimReid in a note to clients.

One year on from the start of the COVID-19 market crash,financial market participants were generally upbeat about theprospect of vaccine rollouts, lockdowns ending and economiesre-opening.

Strong exports and solid construction activity helped theGerman economy to grow by a stronger-than-expected 0.3% in thefinal quarter of last year, the Federal Statistics Office saidon Wednesday, revising up an earlier estimate.

U.S. consumer confidence increased in February and Britonsrushed to book foreign holidays after the government laid outplans to relax restrictions. But EU government leaders willagree on Thursday to maintain curbs on non-essential travelwithin the bloc.

The dollar was down 0.1% versus a basket of currencies at0849 GMT, while euro-dollar was slightly up at $ 1.2165.

The benchmark 10-year German Bund was a touch lower at-0.325%.

Elsewhere, oil prices slipped after industry data showed asurprise build in U.S. crude stocks last week.

Brent crude futures have still gained 26% so far in 2021and U.S. West Texas Intermediate (WTI) crude futureshave risen 27%.

Spot gold rose, hovering just below the previous session’sone-week high.

(Reporting by Elizabeth Howcroft; Editing by Nick Macfie)