HONG KONG: Asian markets rose Thursday but optimism over the pace of economic recovery continued to be offset by worries about rising infections across Europe and the continent's vaccine struggles, with inflation concerns casting an ever-present shadow.

After a year-long surge, global equities have run out of steam with expectations of a strong growth rebound stoking fear that prices will soar, forcing central banks to wind in the ultra-low monetary policies that have supported the rally.

And while the stock gains have been boosted by the rollout of inoculations -- particularly in Britain and the United States -- Europe's stuttering launch has been compounded by a jump in new cases that has led to lockdowns and containment measures being reimposed.

That has many observers questioning whether its economy can recover as quickly as previously hoped.

US markets sank again Wednesday, led by a two percent drop in the Nasdaq as technology firms took a further hit from expectations the Federal Reserve will have to lift interest rates earlier than forecast, despite repeated pledges by policymakers that they will not budge.

Adding to the selling in New York were fears Joe Biden will look to hike corporate taxes to pay for his huge economic rescue packages, while a fractious meeting between US and Chinese officials last week indicated relations will not likely improve any time soon.

"When the short term wobbles, investors naturally start to fret about those lingering longer-term concerns," said Axi strategist Stephen Innes.

"They are also hurting sentiment with renewed worries about US tax policy and a realisation that any lingering hope of a reset in US-China trade relations is unwarranted.

"The latter is quite a worrying proposition as the two economic behemoths draw battlegrounds, setting the stage for a real dust-up as the superpowers shift from vying for supply-chain domination to battling it out for global internet technology supremacy."

Still, Asian investors pushed tentative gains in early trade Thursday following recent losses.

Tokyo rose more than one percent to snap a four-day losing streak, while Sydney, Seoul, Singapore, Taipei, Manila, Bangkok and Wellington also climbed. But Shanghai dipped while Mumbai was more than one percent off.

Hong Kong dipped as investors kept a worried eye on the city's already slow vaccine programme after Pfizer/BioNTech shots were halted Wednesday following the discovery of flawed packaging.

Tech firms in the city followed their US peers lower, with selling also coming after reports said China is considering setting up a joint venture with local firms that could keep track of the personal data they collect on consumers as officials look to tighten their grip on the sector.

The Hang Seng Index remains in correction territory having fallen 10 percent from its recent high seen in February.

"The reflation trade will have further legs to run," Lale Akoner, at BNY Mellon Investment Management, told Bloomberg TV. But she added: "We do see higher inflationary pressures building, higher interest rates and softer dollar to continue."

Oil prices sank more than one percent a day after soaring seven percent in reaction to a giant container ship getting stuck in the Suez Canal, one of the world's busiest shipping routes.

Crude, which tipped a 14-month high earlier this month, has suffered heavy selling in the past couple of weeks on fears about the impact on demand caused by new European lockdowns.

Innes added the Suez blockage "means increased oil on the water -- either queuing for the canal or diverting around Africa. The extra voyage time is akin to 'filling a pipeline' and should support the very jittery market that has seen the rush for the door over the past five sessions".

London, Paris and Frankfurt all fell at the open.

Key figures around 0820 GMT -

Tokyo - Nikkei 225: UP 1.1 percent at 28,729.88 (close)

Hong Kong - Hang Seng: DOWN 0.1 percent at 27,899.61 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,363.59 (close)

London - FTSE 100: DOWN 0.5 percent at 6,681.15

Euro/dollar: DOWN at $1.1810 from $1.1812 at 2040 GMT

Pound/dollar: DOWN at $1.3677 from $1.3681

Euro/pound: UP at 86.34 pence from 86.32 pence

Dollar/yen: UP at 108.98 yen from 108.71 yen

West Texas Intermediate: DOWN 1.4 percent at $60.31 per barrel

Brent North Sea crude: DOWN 1.2 percent at $63.64 per barrel

New York - Dow: FLAT at 32,420.06 (close)