European, US Stocks Mostly Dip; Oil Rally Continues

European and US equity indices mostly retreated Wednesday as markets absorbed recent gains, while oil prices continued an upward climb.

The blue-chip Dow index edged to a fresh record, but other major US indices declined, along with bourses in Paris, Frankfurt and London.

"Despite notable market drivers in the form of the US stimulus plans and ongoing coronavirus vaccination program, the gains seen last week appear to have captured much of that initial improvement in sentiment," said Joshua Mahony, senior market analyst at online trading group IG.

"Instead, we appear to be in a holding pattern as markets await a breakthrough in stimulus talks."

The Democrat-led US Congress is expected to approve a massive stimulus package, although the final amount may come in below the $1.9 trillion that President Joe Biden proposed.

Federal Reserve Chair Jerome Powell said the United States remains "very far" from a strong labor market, and clearly signaled no change in the central bank's easy-money policies.

Powell also repeatedly expressed skepticism about the threat of a rise in inflation, which some economists said could come if the US government approves another massive stimulus measure.

His remarks came after consumer price data released earlier Wednesday showed tepid price increases in January with the exception of gasoline that spiked again.

Meanwhile, oil prices struck 13-month peaks as dealers bet on rebounding demand and an US inventory report showed lower crude supplies.

A note from JPMorgan Chase described oil demand in January as "much sturdier" than expected, and picking up throughout in 2021 in a "supply-led rebalancing" compared with the glut earlier in the pandemic.

Asian stock markets closed higher with eyes firmly on the longer-term outlook for the global economy, as lockdowns are eased and life slowly improves.

Worries remain, however, that markets may have gone a little too far, which analysts said was capping any surge for now.

Hong Kong led Asia's rally, adding 1.9 percent thanks to a surge in Tencent and NetEase following news Chinese authorities had given the green light to their most eagerly awaited video games.

New York - Dow: UP 0.2 percent at 31,437.80 (close)