GLOBAL MARKETS-Strong German data helps European shares recover; Wall Street futures subdued


* Reuters Live Markets blog:

* Graphic: Global asset performance

* Graphic: World FX rates prices, adds commentary and detail)

By Elizabeth Howcroft

LONDON, Feb 24 (Reuters) – European shares rose but U.S.stocks futures pointed to a further tech sell-off in WallStreet, as market participants weighed up signs of economicrecovery against fears of inflation.

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 on Tuesday, FederalReserve Chair Jerome Powell did not seem too worried aboutrising yields, telling Congress they were a statement on themarket’s confidence in the pandemic recovery.

“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.”

European indexes recovered some recent losses, with theSTOXX 600 up 0.3% at 1150 GMT, but still down almost 2% from theone-year high it hit last week.

Germany’s DAX was up 0.7%, helped bystronger-than-expected GDP gains in Europe’s largest economy.The FTSE 100 was up 0.1%.

The MSCI world equity index, which tracksshares in 49 countries, was down 0.3%.

U.S. futures pointed to a mixed open for Wall Street, with S&P 500 e-minis up 0.1% but futures forthe tech-heavy Nasdaq in decline for the seventh consecutive day.

“We’re seeing a modest recovery at this point, so there’sstill clearly a lot of caution,” said Craig Erlam, senior marketanalyst at OANDA, who said the stock market falls this week werelargely a “blip”.

“I think central banks are going to continue to talk downtightening prospects,” he added.

The 10-year U.S. Treasury yield rose, although it was belowthe one-year high it reached on Monday.

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 $ 50,481 at1202 GMT.

“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.

But, one year on from the start of the COVID-19 marketcrash, financial market participants were generally upbeat aboutthe prospect 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.

OANDA’s Craig Erlam said that market consensus is that therewill be no further lockdowns in Europe and the United Statesafter the summer.

“Markets are working on the assumption that we are at theend of the tunnel, we’re right near the end of the tunnel, andwe’re not going back in,” he said.

The dollar was broadly flat against a basket of currencies, while euro-dollar was slightly up at $ 1.2166.

The benchmark 10-year German Bund was steady.

Elsewhere, oil prices rose, although a surprise build-up inU.S. inventories last week limited the gains.

Brent and U.S. West Texas Intermediate (WTI) crude futureshave both risen by around 28% so far in 2021 .

(Reporting by Elizabeth Howcroft; Editing by Nick Macfie andChizu Nomiyama)