LONDON: Global stock markets wavered on Monday as soaring COVID-19 cases offset investor hopes of a quick economic recovery, even after data showing that the Chinese economy rebounded faster-than-expected in the fourth quarter of 2020.

European stocks as measured by the STOXX 600 index struggled for direction, last trading 0.1% higher as of 1446 GMT, after failed merger talks between French retailer Carrefour and Alimentation Couche-Tard pulled the gauge lower at the open. The continent's 50 biggest stocks were down 0.2%

In Asia, Chinese blue chips gained 1.1% after the economy was reported to have grown 6.5% in the fourth quarter, on a year earlier, topping forecasts of 6.1%.

Industrial production for December also beat estimates, although retail sales missed expectations.

"The recovery in domestic demand still lacks a solid backing," said Lauri Halikka, fixed income and FX strategist at SEB. "Sporadic virus outbreaks have intensified downside risks in the near term."

China reported more than 100 new COVID-19 cases for the sixth consecutive day, with rising infections in the northeast fuelling concern of another wave when hundreds of millions of people travel for the Lunar New Year holiday.

Tough new controls in the city of Gongzhuling in Jilin province, which has a population of about 1 million people, brings the total number of people under lockdown to more than 29 million.

Hallika said the impact of the latest regional lockdowns and mass testing was likely to be limited and short-lived.

The economic pick-up in China was a marked contrast to the United States and Europe, where the spread of coronavirus has hit consumer spending, underlined by dismal U.S. retail sales reported on Friday.

Poor U.S. consumer spending data last week helped Treasuries pare some of their recent steep losses and 10-year yields were trading at 1.097%, down from last week's top of 1.187%.

The more sober mood in turn boosted the safe-haven U.S. dollar, catching a bearish market deeply short. Speculators increased their net short dollar position to the largest since May 2011 in the week ended Jan. 12.

Also evident are doubts about how much of U.S. President-elect Joe Biden's stimulus package will make it through Congress given Republican opposition, and the risk of more violence at his inauguration on Wednesday.

Elsewhere, in Asian markets, Japan's Nikkei slipped 1% and away from a 30-year high.

MSCI'S All Country World Index, which tracks stocks across 49 countries, traded 0.05% lower, down for a second session after hitting record highs only last week.

E-Mini futures for the S&P 500 traded flat, though Wall Street will be closed on Monday for a holiday.

Recent price action in markets has prompted investors to discuss whether asset markets may be overvalued.

In a monthly letter to clients last week, Mark Haefele, chief investment officer at UBS Global Wealth Management, said all of the preconditions for a bubble were in place.

"Financing costs are at record lows, new participants are being drawn into markets, and the combination of high accumulated savings and low prospective returns on traditional assets create both the means and the desire to engage in speculative activity," he said.

He warned that in the months ahead investors would need to pay particular attention to "risks of a monetary policy reversal, rising equity valuations, and the rate of the post-pandemic recovery".

Haefele said however that while he saw pockets of speculation, the broader equity market was not in a bubble.

Cryptocurrency bitcoin traded up 1.6%, fetching $36,393.

The dollar index fell 0.06% to 90.818, its strongest since Dec. 21,, and away from its recent 2-1/2 year trough at 89.206.

The euro traded flat at $1.2072, to its lowest since Dec. 2, while the dollar gained 0.15% against the yen at 103.73 and well above the recent low at 102.57.

The European Central Bank will this week face more questions about an increasingly challenging outlook only a month after it unleashed fresh stimulus to bolster the euro zone economy.

The Canadian dollar eased to $1.2792 per dollar after Reuters reported Biden planned to revoke the permit for the Keystone XL oil pipeline.

Biden's pick for Treasury Secretary, Janet Yellen, is expected to rule out seeking a weaker dollar when testifying on Tuesday, the Wall Street Journal reported.

Gold prices gained 0.3% to $1,833 an ounce, compared to its January top of $1,959.

Crude oil prices ran into profit-taking on worries the spread of increasingly tight lockdowns globally would hurt demand, a fall that also dragged the Russian rouble lower by 1.1%.

Brent crude futures were down 0.1% at $55.03 a barrel, while U.S. crude traded flat at $52.34.