World stock markets grind higher, but HSBC weighs

World stocks regained momentum on Tuesday, lifted by rising oil prices and strong eurozone economic data, but a massive earnings drop at banking giant HSBC kept a lid on London and Hong Kong.

Equity markets appear to be defying gravity as they move stubbornly higher, shrugging off predictions of an overdue correction, analysts said.

"The low-volatility grind higher in equity markets continues with stunning consistency," said Jasper Lawler, an analyst with London Capital Group. "Everybody knows there has to be a big shake-out sometime but the momentum is still firmly higher."

Wall Street continued its winning streak approaching midday in New York after investors returned from a three-day weekend.

European heavyweights Frankfurt and Paris finished the day with solid gains.

But HSBC's disappointing fourth-quarter performance pushed London into negative territory as the bank's shares tumbled by more than six percent. Financials Barclays, Standard Chartered and Lloyds joined the downward trend.

Without HSBC's share price fall, the FTSE would have reached new highs for this month, analysts said.

- 'Millstone' HSBC -

"Banks are today's index millstone," said Michael van Dulken, head of research at Accendo Markets in London.

Asian markets mostly rose, with Tokyo boosted by a jump in the dollar against the yen amid intensifying talk that the Federal Reserve could lift interest rates as soon as next month.

But Hong Kong, where HSBC shares are also listed, suffered from what Van Dulken called a "whopping" profit drop.

The reason HSBC gave for its earnings decline sent new shivers through markets already spooked by uncertainty over political stability in Europe, Brexit and US trade policies.

"We highlight the threat of populism impacting policy choices in upcoming European elections, possible protectionist measures from the new US administration impacting global trade, uncertainties facing the UK and the EU as they enter Brexit negotiations," group chairman Douglas Flint said in a statement filed to the Hong Kong stock exchange.

On the bright side, mining giant BHP Billiton gained nearly one percent in Sydney as it reported a dramatic rebound in half-yearly profits on the back of surging coal and iron ore prices and improved productivity.

The results also lifted BHP's stock in London and that of fellow miner Rio Tinto, but Anglo American was lower after the company reported results.

Eurozone stock markets meanwhile were underpinned by a key survey saying the eurozone economy grew at its fastest pace in six years in February, as all signs pointed to the recovery maintaining "strong momentum".

Data monitoring company IHS Markit also said job creation in the 19-country eurozone recorded its best level for nearly a decade.

The strong data gave the market a "base of tranquility", IG France analyst Alexandre Baradez told AFP, "softening the impact of the political theme which had monopolised attention in recent days".

- Greenback strong -

The dollar climbed against most of its peers following comments from the head of the Fed's Philadelphia branch, Patrick Harker, that a March rate rise was not "off the table at this point".

Expectations of a hike have increased since Donald Trump was elected president in November as dealers bet his big-spending, tax-cutting plans will fan inflation.

Investors are keeping an eye on the release this week of Fed minutes from its most recent policy meeting, hoping for fresh clues about its plans for rates.

Oil prices, meanwhile, made strong gains as investors focused on OPEC's apparent ability to stick to agreed production cuts, with rising US production seen as less of a worry, but perhaps not for long.

"While oil prices could edge higher amid the supply cut optimism, the concealed concerns of US shale boosting oil production and negatively impacting OPEC's efforts could create some headwinds in the future," cautioned Luzdary Hammad at FXTM.

- Key figures around 1645 GMT -

London - FTSE 100: DOWN 0.3 percent at 7,274.83 (close)

Frankfurt - Dax 30: UP 1.2 percent at 11,967.49 (close)

Paris - CAC 40: UP 0.5 percent at 4,888.76 (close)

EURO STOXX 50: UP 0.8 percent at 3,339.33 (close)

New York - Dow: UP 0.3 percent at 20,692.43

Tokyo - Nikkei 225: UP 0.7 percent at 19,381.44 (close)

Hong Kong - Hang Seng: DOWN 0.8 percent at 23,963.63 (close)

Shanghai - Composite: UP 0.4 percent at 3,253.33 (close)

Euro/dollar: DOWN at $1.0545 from $1.0622

Pound/dollar: UP at $1.2470 from $1.2467

Dollar/yen: UP at 113.53 yen from 113.09 yen

Oil - West Texas Intermediate: UP 99 cents per barrel at $54.77

Oil - Brent North Sea: UP 79 cents at $56.97