European shares were slightly higher in early trading on Monday as investors focused on company earnings and U.S. Federal Reserve policymakers entered a quiet period ahead of their meeting next week.
Stock market moves in Asian trading were small and economic data from China was mixed: industrial output picking up but retail sales missed expectations.
China's central bank unexpectedly eased policy by cutting rates on medium-term loans.
Analysts expect more policy easing as growth in the world's second-largest economy has shown signs of slowing from its rapid rebound after the COVID-19 slump.
At 0856 GMT, the MSCI world equity index, which tracks shares in 50 countries, was up 0.1%. Europe's STOXX 600 was up 0.5%. U.S. markets are closed on Monday for a public holiday.
Expectations of central banks tightening policy to combat persistent inflation have meant that equities have generally struggled to make gains so far this year and investors are rotating from growth to value stocks.
Investors are focused on company earnings, which will need to be strong to prevent further losses. Goldman Sachs, BofA, Morgan Stanley and Netflix report earnings this week.
Marija Veitmane, senior multi-asset strategist at State Street Global Markets, said that she would be looking to see how much the costs of higher prices and labour shortages have affected corporate profits, as well as how companies will spend the money on their balance sheets.
"One thing that was a very positive surprise for us last year, particularly towards the end of the year, was the strength of corporate margins," Veitmane added. "Corporates were able to pass higher costs to the end consumer and that was really encouraging news for us. That's exactly what we'll be looking for this time around."
FED MEETING
The U.S. Federal Reserve meets on Jan. 25-26 and investors expect a cycle of rate hikes to begin in March. Rate hikes tend to harm riskier assets such as equities.
Speculators' net bearish bets on benchmark U.S. 10-year Treasury note futures have swelled to their largest since February 2020, just before the onset of the pandemic, according to Commodity Futures Trading Commission data released on Friday.
The yield on the 10-year U.S. Treasury yield hit a two-year high last week. The implied yield from futures rose to 1.85% early on Monday.
"Inflation is high, markets expect central banks to be much more aggressive and interest rates going higher, but what we're seeing is that the yield curve is not steepening," State Street's Veitmane said.
"What that means to me is that markets expect the hiking cycle to start faster but to be quite shallow, and I think that's really key for equity markets."
At 0916 GMT, the U.S. dollar index was down 0.1% on the day at 95.075, clinging to its recent bounce. The euro was at $1.1432.
Ahead of a Bank of Japan policy meeting concluding on Tuesday, the dollar was up 0.2% against the yen, at 114.435 .
Euro zone government bond yields edged higher, with the benchmark German 10-year yield at -0.034%.
Brent crude futures hit their highest in more than three years as investors bet supply will remain tight amid restrained output by major producers, with global demand unperturbed by the Omicron coronavirus variant.
Bitcoin was a touch lower, around $42,850.