BEIJING - Global stocks mostly fell Tuesday as China's smaller-than-forecast interest rate cut failed to dispel worries over its flagging powerhouse economy.
Asian stocks finished mostly lower, European equities were tilted to the downside in afternoon trading, and Wall Street opened lower upon returning from long holiday weekend.
London stocks firmed on the eve of critical UK inflation data and ahead of Thursday's expected interest rate increase from the Bank of England.
World oil prices slid and the dollar wavered against rival currencies.
- 'Headwinds for global economy' -
"Developments in China, where the central bank cut its reference interest rate by ten basis points, continue to point to a slower-than-predicted post-pandemic recovery in the world's second-largest economy," said ActivTrades analyst Ricardo Evangelista.
"With China's economy struggling to regain momentum, the headwinds for the global economy get stronger," he warned.
The People's Bank of China reduced its benchmark five-year rate by 10 basis points, less than the 15 points expected, though it did meet forecasts for a 15-point reduction in the one-year rate.
Traders were left disappointed by Beijing's lack of action to kickstart the country's lumbering economic recovery.
The move came after the PBoC had last week lowered two other key rates and pumped billions into financial markets.
In reaction Hong Kong stocks dropped more than one percent, with tech firms -- which are susceptible to higher borrowing costs -- taking the brunt of the selling, while property companies also dropped.
Shanghai was also in negative territory, but Tokyo eked out gains.
Tuesday's retreat extended this week's losses that were fuelled by frustration at the lack of detail from China on measures to boost the economy, which has failed to recover since painful zero-Covid measures were removed at the end of 2022.
There had been hope they would unveil help for the troubled property sector -- a crucial growth driver-- as well as consumer activity and youth unemployment.
China's decision to reduce rates contrasts with Western countries, which have been forced into a series of interest rate hikes while reducing money supply to tame rampant inflation.
Wall Street stocks slid at the start of trading in a week where Federal Reserve Chairman Jerome Powell's semi-annual appearances before lawmakers will be closely scrutinised.
Last week the Fed hit pause on raising interest rates to bring down inflation although it signalled more hikes are to come.
While the run up in stock prices in recent weeks has been based on belief that the Fed is done or nearly done in raising interest rates, the rally may not be over.
"Market participants are waiting to see if the major indices are going to continue to defy expectations for a pullback and press higher," said analyst Patrick O'Hare at Briefing.com.
"That type of resilience to selling efforts has been a driver of the extended winning streaks in that it has prompted short sellers to cover positions and has swayed sidelined investors to redeploy cash for fear of missing out on better inflation-adjusted returns," he added.
In company news, Alibaba said it will replace its top boss in a surprise move at the e-commerce titan as it looks to recover from years of slow growth.
Chairman and CEO Daniel Zhang will be replaced by Joseph Tsai as chairman and Eddie Wu as CEO from September 10.
Alibaba shares shed 1.5 percent in Hong Kong and its New York-listed ADRs dropped 3.0 percent at the start of trading.
- Key figures around 1330 GMT -
New York - Dow: DOWN 0.5 percent at 34,132.74 points
London - FTSE 100: UP 0.1 percent at 7,596.24
Frankfurt - DAX: DOWN 0.3 percent at 16,154.30
Paris - CAC 40: DOWN less than 0.1 percent at 7,312.12
EURO STOXX 50: DOWN 0.1 percent at 4,356.27
Tokyo - Nikkei 225: UP 0.1 percent at 33,388.91 (close)
Hong Kong - Hang Seng Index: DOWN 1.5 percent at 19,607.08 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,240.36 (close)
Euro/dollar: DOWN at $1.0915 from $1.0921 on Monday
Pound/dollar: DOWN at $1.2736 from $1.2792
Dollar/yen: DOWN at 141.46 yen from 141.98 yen
Euro/pound: UP at 85.68 pence from 85.38 pence
Brent North Sea crude: DOWN 0.2 percent at $75.94 per barrel
West Texas Intermediate: DOWN 1.0 percent at $71.03 per barrel