(Updates prices as of 0753 GMT)
Global shares were mixed on Tuesday as investors waited to see if U.S. Federal Reserve Chair Jerome Powell would sound supportive of rate cuts after evidence the U.S. labour market is cooling.
The Euro STOXX 600 .STOXX fell 0.2%, with euro zone blue chip stocks .STOXX50E down by a similar amount. Energy shares .SXEP , tracking lower oil prices, led the losses, falling 0.9%.
Wall Street, however, was set for a brighter open with S&P 500 futures ESc1 up 0.2% and Nasdaq futures NQc1 gaining 0.4. Wall Street on Monday had inched higher to close at record peaks on Monday.
Powell is set to appear before Congress on Tuesday and Wednesday, as investors wagered a slew of soft labour market data has boosted the chance of a rate cut in September to about 80%. FEDWATCH
The Fed chair's testimony pushed investor focus away from France, where political deadlock in the euro zone's second biggest economy cooled concerns over the potential fiscal impact of far-left or far-right policies.
France is facing a
hung parliament
after a surprise left-wing surge blocked Marine Le Pen's quest to bring the far-right to power. The euro swung on Monday, but as the dust settled, the single currency was on Tuesday steady close to a four-week high.
"U.S.-wise, the Fed policy is important but not the only driver," said Alexandre Marquis, senior portfolio manager at asset manager Unigestion. "Corporate earnings, this helps alleviate the disappointing expectations for rate cuts."
Euro zone bond yields also inched higher ahead of the Powell testimony. Germany's 10-year bond yield DE10YT=RR , the benchmark for the euro zone bloc, rose 1 basis point to 2.53%.
The closely watched gap between French and German borrowing costs, which rose to the highest since 2012 in late June at 85 bps on fears of a far-right victory, held steady at 66 bps.
France's hung parliament has reassured markets, Deutsche Bank analysts wrote, as "it makes it difficult for any policies to be implemented, with neither the far-left or the far-right able to implement their programme on these numbers."
Earlier, Japan's Nikkei index .N225 jumped 1.96%, touching a record high, supported by semiconductor shares and a pummelled yen, which boosts the foreign earnings of Japanese companies.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged 0.4% higher, just a touch below a two-year top a day earlier.
TWO RATE CUTS? U.S. consumer price data due on Thursday will also give further clues to the health of the U.S. economy. Headline inflation for June is expected to slow to 3.1%, from 3.3% in May, with core inflation forecast steady at 3.4%.
For the remainder of 2024, markets have fully priced in a total 50 basis points of easing, equivalent to two rate cuts. FEDWATCH
The euro held its ground at $1.082 as investors came to terms with the results in France.
The U.S. dollar =USD steadied near four-week lows at 105.02 against a basket of currencies, offering some respite to the battered yen. The Japanese currency JPY=EBS held at 160.87 per dollar, having plumbed a 38-year low of 161.96 per dollar last week.
Oil prices were steady after a hurricane that hit a key U.S. oil-producing hub in Texas caused less damage than markets had expected, easing concerns over supply disruption.
Brent LCOc1 futures fell 0.4% to $85.41 a barrel, while U.S. West Texas Intermediate crude CLc1 climbed 2 cents to $82.33.
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