Investors have been on a buying spree since shares hit deep lows in the wake of Donald Trump's April global tariff bombshell, with sentiment buoyed by trade agreements and signs that the Federal Reserve was about to resume its interest rate cut programme.

The US central bank -- citing a weak labour market and inflation that has not spiked -- last week announced its reduction, and forecast there could be two more this year.

However, while traders have been banking on a period of easing, some Fed officials including boss Jerome Powell are trying to take a more cautious approach, citing still-elevated inflation.

His remarks this week that stocks are "fairly highly valued" and that there was "no risk-free path" on rates has tempered the euphoria on trading floors.

The bank will be keeping watch on the release this week of its preferred gauge of inflation -- the personal consumption expenditure index -- and next week's non-farm payrolls report.

Tokyo held solidly in positive territory early Thursday, but most other markets trended lower.

Hong Kong dropped, with tech titan Alibaba dipping after Wednesday's gain of more than nine percent in reaction to its chief executive saying it planned to ramp up spending on artificial intelligence. Its US-listed stock piled on more than eight percent.

And China's biggest car exporter Chery Automobile rocketed more than at the start of its 13 percent on its trading debut in the city, having raised about US$1.2 billion in its initial public offering. However, it gave up most of the gains as the day wore on.

There were small losses in Singapore, Wellington, Taipei, Manila and Jakarta, while Sydney and Bangkok edged up with Shanghai and Seoul barely moved.

London opened on the back foot with Paris and Frankfurt.

The tepid day came after a second day of losses in Wall Street for all three main indexes.

While there appears to be some unease in recent days over the latest market rally.

"With major regions in easy fiscal mode, and with the Fed cutting against a backdrop of broadening and accelerating profits, it's not hard to argue for a boom in (earnings per share) and GDP growth," Bank of America analysts wrote.

"US (capital expenditure) and revisions are broadening beyond tech, sticky inflation could help sales and thus drive operating leverage. This is the higher probability 'tail' in 2026 than stagflation or recession, in our view."

And Pepperstone's Michael Brown added that "the bull case has been a solid one for quite some time now, with the S&P having gone over 100 days without a daily loss of at least two percent, and remains firmly intact, with the underlying economy resilient and earnings growth robust".

"Furthermore, the Fed's 'run it hot' approach, resulting in a looser policy stance, sooner than expected, tilts risks to the outlook to the upside."

- Key figures at around 0715 GMT -

Tokyo - Nikkei 225: UP 0.3 percent at 45,754.93 (close)

Hong Kong - Hang Seng Index: DOWN 0.3 percent at 26,428.63

Shanghai - Composite: FLAT at 3,853.30 (close)

London - FTSE 100: DOWN 0.3 percent at 9,220.25

Euro/dollar: UP at $1.1746 from $1.1737 on Wednesday

Pound/dollar: UP at $1.3461 from $1.3445

Dollar/yen: DOWN at 148.77 yen from 148.91 yen

Euro/pound: DOWN at 87.25 pence from 87.29 pence

West Texas Intermediate: DOWN 0.2 percent at $64.85 per barrel

Brent North Sea Crude: DOWN 0.1 percent at $69.21 per barrel

New York - Dow: FLAT at 46,121.28 (close)

dan/fox

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