San Francisco Frontiers - Stocks hit turbulence in earnings season

Equities have performed strongly since the start of the year as China's economy reopens from strict lockdowns, energy prices ease, and hopes rise that a severe downturn can be averted even if inflation remains high and interest rates keep rising, albeit at a slower pace.

"There is a twinge of nervousness setting in that the stock market has gotten ahead of itself and is due for a pullback," said market analyst Patrick O'Hare at Briefing.com.

Wall Street's three main indices all opened 0.5 percent lower.

European indices failed to gain much traction from a closely-watched survey showing the eurozone economy grew in January for the first time in six months.

The S&P Global Flash Eurozone purchasing managers' index (PMI) rose to 50.2 in January from 49.3 in December. A figure above 50 indicates growth.

While the overall result bolsters hopes that Europe will avoid a recession this winter, on a national level the data wasn't so rosy.

"Although the latest European PMI numbers beat expectations, the upside surprise was minimal and there were some downside surprises on a country level, with French and UK services, and German manufacturing all disappointing expectations," said market analyst Fawad Razaqzada at City Index and Forex.com.

In afternoon trading, London and Frankfurt were both down 0.4 percent while Paris shed 0.2 percent.

At the same time, heavy fallout from lingering high energy costs was further evidenced Tuesday with data showing UK government debt ballooning further in December as it subsidises gas and electricity bills for households and businesses.

"The impact of sky-high energy prices isn't just being felt by households and businesses, it's also taking a big bite out of the UK's public finances," said AJ Bell analyst Danni Hewson.

- Tokyo shines -

In Asia, Tokyo stocks led global gains in another day thinned by the Lunar New Year break, with sentiment boosted once more by a surge Monday on Wall Street.

Hopes that the Federal Reserve will slow down its pace of interest rate hikes have given investors optimism in recent days that the US economy could avert a recession, or at least suffer only a mild contraction.

The gains come after markets suffered wobbled last week on worries about a downturn caused by a series of rate hikes last year aimed at taming decades-high inflation.

While the year has started on a positive note, BlackRock Investment Institute warned that markets were "vulnerable to negative surprises -- and unprepared for recession".

Companies are in the midst of reporting earning for the past quarter, with investors in particular looking for information how firms expect this year will turn out.

General Electric, Lockheed Martin and Raytheon all reported results before trading got underway. Microsoft reports after the closing bell.

"There will be a lot of attention on those results, the growth rates for Microsoft's business lines, and any guidance the company provides," O'Hare said.

Oil prices rose slightly after jumping last week to their highest point since November, on demand hopes fuelled by China's reopening.

- Key figures around 1430 GMT -

London - FTSE 100: DOWN 0.4 percent at 7,751.47 points

Frankfurt - DAX: DOWN 0.4 percent at 15,046.68

Paris - CAC 40: DOWN 0.2 percent at 7,016.44

EURO STOXX 50: DOWN 0.4 percent at 4,136.13

New York - Dow: DOWN 0.5 percent at 33,466.41

Tokyo - Nikkei 225: UP 1.5 percent at 27,299.19 (close)

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.0865 from $1.0877 on Monday

Pound/dollar: DOWN at $1.2295 from $1.2374

Euro/pound: DOWN at 88.36 pence from 88.47 pence

Dollar/yen: DOWN at 130.36 yen from 130.66 yen

Brent North Sea crude: UP 0.1 percent at $88.30 per barrel

West Texas Intermediate: UP 0.2 percent at $81.80 per barrel

burs/lth

M.Powell--SFF