World stock markets timidly pushed higher on Thursday as investors shopped for bargains following a recent brutal correction sparked by inflation fears.
European stocks were modestly firmer at the closing bell, although off the day’s best levels.
Paris was the best performer, helped by an 8.5 percent surge in Airbus shares after the aircraft maker reported strong results.
New York stocks built on the previous day’s rebound, with Wall Street trading a touch firmer approaching midday.
US stocks are ‘continuing to show some resiliency in the face of another dose of hotter-than-expected inflation data,’ the Charles Schwab brokerage said.
On Wednesday, the US reported a surprisingly strong rise in consumer prices, briefly spooking markets, but a weak retail sales report suggested that fears of an overheating American economy may be premature, analysts said.
Hong Kong stocks ended the Year of the Rooster by leading a rally across Asian markets.
Under fire again
But Thursday’s half-hearted action reflected a worry that the worst is not over for stocks after their worst week in years last week when trillions of dollars were wiped off valuations.
‘We think that equities will come under fire again before long,’ said Oliver Jones, analyst at Capital Economics.
Global equities went into a tailspin last week on the prospect the US Federal Reserve will hike interest rates at a sharper pace than expected a few months ago in order to prevent a spurt in inflation from a resurgent US economy and improving wages.
But some analysts have suggested that the Fed will not be pushed into more aggressive rate hikes than the market has so far anticipated.
‘There is a sense now that higher consumer prices could kill off consumer spending and weigh on the US growth rebound,’ said Jasper Lawler, head of research at London Capital Group.
Fed ‘won’t deviate
‘Slower growth would keep a lid on wage and overall price pressures,’ he added, ‘so the Fed will probably will not deviate from the three hikes priced in by the market.’
Market analyst David Madden noted that the FTSE 100, DAX 30 and CAC 40 all hit one-week highs Thursday as investors were regaining confidence. 
‘Equities continue to be in recovery mode as traders are still cautiously optimistic,’ he said in a note to clients.
‘Investors are viewing the smaller swings on global stock markets as a sign that a lot of the fear dissipated, and are content to buy back into the market,’ he added.
Meanwhile in Asia, Hong Kong ended two percent higher as traders headed into the Chinese New Year break. The index rose 5.6 percent over the past three days, helping it bite into last week’s drop of more than nine percent.
Tokyo ended 1.5 percent higher, despite a surge in the yen against the dollar, which tends to hurt exporters.
Dollar takes a hit
While equities ran higher, the dollar was in the dog house.
On currency markets the dollar took a hit across the board, with the yen at fresh 15-month highs, while the euro built on Wednesday’s gains that came after figures showed solid German economic growth.
Although higher inflation and bond yields would normally be positive for the dollar, the analysts said other options were more attractive.
‘Global rate differentials explain a lot about why the dollar can’t find a bid, even when US inflation exceeds expectations,’ said Lawler at London Capital Group.
‘As the ECB, Bank of England (and Bank of Japan) move closer to tightening policy, bund, gilt and JGB yields will rise faster than (US) treasuries, making the euro, pound and yen more attractive than the dollar,’ he said.
The South African rand went to a three-year high after Jacob Zuma resigned as president, as the ruling ANC party finally turned against him after nine years of corruption scandals, economic slowdown and falling popularity.
Bitcoin rose, pushing for the $10,000 mark after reaching $9,304.99 late on Wednesday.
Key figures around 1635 GMT
London – FTSE 100: UP 0.3 percent at 7,234.81 points (close) 
Frankfurt – DAX 30: UP 0.1 percent at 12,346.17 (close)
Paris – CAC 40: UP 1.1 percent at 5,222.52 (close)
EURO STOXX 50: UP 0.6 percent at 3,389.63
New York – DOW: UP 0.2 percent at 24,936.69
Tokyo – Nikkei 225: UP 1.5 percent at 21,464.98 (close)
Hong Kong – Hang Seng: UP 2.0 percent at 31,115.43 (close)
Shanghai – Composite: Closed for a public holiday
Euro/dollar: UP at $1.2489 from $1.2457 at 2140 GMT
Pound/dollar: UP at $1.4067 from $1.4006
Dollar/yen: DOWN at 106.25 yen from 106.98 yen
Oil – West Texas Intermediate: DOWN 36 cents at $60.24 per barrel
Oil – Brent North Sea: DOWN 78 cents at $63.58 per barrel