LONDON: World stocks nudged slightly higher Tuesday, with gains capped by news of plunging German investor confidence and markets cautious on the eve of a US Federal Reserve decision, dealers said.
Equities were still wobbly over a Facebook-led tech sell-off and ahead of a feared US interest rate hike this week, as concerns of a possible trade war sparked by President Donald Trump's announcement on tariffs also weighed.
In Tuesday deals, the London FTSE 100 and New York Dow Jones indices recovered composure, while the Paris CAC and Frankfurt DAX saw earlier gains capped by news that German investor confidence plunged in March, reflecting fears of a transatlantic trade war.
A survey of 220 analysts and investors from the ZEW institute gave a reading of 5.1 points -- a slump of 12.7 points from February's level and far below the 13.1 forecast by analysts.
The last time confidence among financial players was so low was in the months after Britain's June 2016 vote to quit the European Union.
London stocks meanwhile added 0.3 percent following data showing a slowdown in British annual inflation in February.
"Small gains in UK and European markets have not put much of a dent in yesterday's losses," noted IG analyst Chris Beauchamp.
"Hopes of a rebound in stocks have faded, with little enthusiasm evident this morning among buyers in the wake of yesterday's downward turn."
News of a massive data breach at Facebook fuelled fears of a regulatory crackdown on the technology sector, sparking plunges worldwide on Monday.
The scandal at the social media giant further fuelled anxiety among investors already fretting over possible US rate rises and Trump's protectionist rhetoric, which has sparked talk of a global trade war.
Reports said Cambridge Analytica, the analysis firm hired by Trump's 2016 presidential campaign, stole data from 50 million Facebook user profiles to help design software to predict and influence voters' choices.
"The scandal surrounding Facebook in relation to Cambridge Analytica has dented the tech sector as a whole, and the longer the story looms, the more pressure is likely to be applied to the industry," CMC Markets UK analyst David Madden said.
The news hammered tech giants, with Facebook plunging 6.8 percent while other household names were also hit -- including Apple, Google-parent Alphabet and Netflix -- by regulatory concerns.
- Fed watch -
Investors are keeping a close watch on the Fed's meeting this week, seeking clues about its timetable for tightening monetary policy.
"The start of the Fed's monetary policy meeting that will conclude tomorrow with a rate decision is gathering attention," Charles Schwab analysts said.
Opinion is split on the number of rate rises it will announce this year, with some forecasting three and others four.
Market-watchers warn that a G20 meeting of finance ministers in Argentina could also revive tensions on international trade after Trump unveiled his controversial tariffs this month.
In foreign exchange activity, the pound nudged lower against the dollar. It had jumped Monday after Britain and European Union leaders agreed a post-Brexit transition deal that will buy businesses and citizens time to adjust to life after the divorce.
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