Morning Chronicle - Global stocks mostly fall on inflation worries as dollar gains

Wall Street stocks began June on a high note, but early gains petered out following mixed economic data.

Earlier, Frankfurt, Paris and London all finished in the red.

"The quick reversal is a reminder that we are still in a bear market and investors continue to face significant risks with inflation still showing no signs of easing in a meaningful way, and central banks are continuing to tighten their belts," Fawad Razaqzada, analyst at City Index and FOREX.com, said.

American factory growth sped up in May after slowing in the prior two months, even as employment contracted and firms continue to face supply challenges, according to a business survey.

The largely positive report gives "the Fed more confidence to raise rates," boosting the dollar, said FOREX.com's Joe Perry.

Meanwhile, all 12 Federal Reserve regions reported growth, according to the central bank's "beige book" survey of business conditions, but a third of those said the pace has slowed, and three "specifically expressed concerns about a recession," the report said.

Stocks enjoyed rare gains last week but have been on the defensive this week again.

"It's going to swing back and forth over the next couple of months until we get some firm proof that inflation is coming down," said Brad Bechtel of Jefferies.

Equities were mixed in Asia, with traders shrugging off a further easing of lockdown restrictions in China that many hope will give a much-needed boost to the world's number-two economy.

Hong Kong and Shanghai slipped, though Tokyo, Sydney, Singapore and Wellington rose.

Oil prices pushed higher as Russian Foreign Minister Sergei Lavrov reaffirmed Moscow's commitment to OPEC+ agreements during a visit to Saudi Arabia.

The Wall Street Journal had reported that OPEC was considering removing Russia from an agreement that has locked producers into limited output increases. Moscow's removal would mean an early end to the pact and allow major crude nations such as Saudi Arabia to open the taps, analysts said.

On Thursday, the 13 members of the Organization of the Petroleum Exporting Countries and their 10 partners -- who make up OPEC+ -- are due to hold their monthly talks on output increases.

- Key figures at around 2050 GMT -

New York - Dow: DOWN 0.5 percent at 32,813.23 (close)

New York - S&P 500: DOWN 0.8 percent at 4,101.23 (close)

New York - Nasdaq: DOWN 0.7 percent at 11,994.46 (close)

London - FTSE 100: DOWN 1.0 percent at 7,532.95 (close)

Frankfurt - DAX: DOWN 0.3 percent at 14,340.47 (close)

Paris - CAC 40: DOWN 0.8 percent at 6,418.89 (close)

EURO STOXX 50: DOWN 0.8 percent at 3,759.54 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 27,457.89 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 21,294.94 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,182.16 (close)

Euro/dollar: DOWN at $1.0658 from $1.0734 on Tuesday

Pound/dollar: DOWN at $1.2492 from $1.2602

Euro/pound: UP at 85.25 pence from 85.18 pence

Dollar/yen: UP at 130.15 yen from 128.67 yen

Brent North Sea crude: UP 0.6 percent at $116.29 per barrel

West Texas Intermediate: UP 0.5 percent at $115.26 per barrel

M.Carter--MC-UK