Equities have enjoyed weeks of advances thanks to signs of an easing in the disease in major economies and the gradual lifting of lockdown measures that are expected to have sent the world into a deep recession.

But that optimism has been tempered by uncertainty about the future, while Donald Trump has continued to target China over the outbreak and threatened fresh tariffs on the country, fuelling worries of another painful trade war between the superpowers.

In his latest volley, on Wednesday night he tweeted that "It was the 'incompetence of China', and nothing else, that did this mass Worldwide killing".

He later accused counterpart Xi Jinping of being behind a "disinformation and propaganda attack on the United States and Europe".

"It all comes from the top", he said, adding that China was "desperate" to have former vice president Joe Biden win November's presidential election.

Stephen Innes, of AxiCorp, warned that investors might not be taking the simmering tensions seriously enough.

"Markets may be pricing in far too much complacency as the US-China 'phase one' trade deal could be at risk, as the pandemic and resulting acute economic downturn have made China's trade commitment to the US much more challenging to fulfil," he said in a note.

Minutes from the Federal Reserve highlighted its concerns about the impact of the outbreak.

Policymakers were worried that "even after social-distancing requirements were eased, some business models may no longer be economically viable".

This would be the case especially if consumers decide to "avoid participating in particular forms of economic activity", the minutes said.

- Europe back in the air? -

The World Health Organization said 106,662 virus cases were reported Tuesday, the biggest daily jump since the disease broke out in December, with Latin America now of particular concern.

Tokyo ended down 0.2 percent, Shanghai shed 0.6 percent and Hong Kong fell 0.4 percent along with Sydney, while Singapore dropped 0.1 percent and Wellington gave up 0.5 percent.

London dropped 0.8 percent at the open while Paris and Frankfurt dropped more than one percent.

However, Mumbai, Seoul, Taipei, Kuala Lumpur and Manila were all in positive territory.

But while uncertainty reigns, traders continue to take heart from the good news, with European Union tourism ministers holding a virtual meeting, while Greece unveiled plans to let seasonal hotels reopen from June 15 and international flights resume on July 1.

Italian airports were given the go-ahead to reopen from June 3, including for international flights, while Britain's EasyJet said it would be back in the air on June 15, with "a small number of flights".

Meanwhile, researchers reported progress from a study involving monkeys that looked at a prototype vaccine and another on whether infection with COVID-19 provides immunity against re-exposure.

That came days after US firm Moderna said early tests of a possible vaccine had been successful.

"Rollback continues to support risk sentiment with markets optimistic that economic activity will rebound sharply," said National Australia Bank's Tapas Strickland.

"Vaccine hopes also continue... The developments again reinforce for markets it's a matter of when, rather than if for a vaccine."

- Key figures around 0720 GMT -

Tokyo - Nikkei 225: DOWN 0.2 percent at 20,552.31 (close)

Hong Kong - Hang Seng: DOWN 0.4 percent at 29,296.77

Shanghai - Composite: DOWN 0.6 at 2,867.92 (close)

London - FTSE 100: DOWN 0.8 percent at 6,018.28

West Texas Intermediate: UP 2.0 percent at $34.17 per barrel

Brent North Sea crude: UP 1.8 percent at $36.38 per barrel

Euro/dollar: DOWN at $1.0970 from $1.0983 at 2050 GMT

Dollar/yen: UP at 107.80 yen from 107.55 yen

Pound/dollar: DOWN at $1.2194 from $1.2233

Euro/pound: DOWN at 89.64 pence from 89.74 pence

New York - Dow: UP 1.5 percent at 24,575.90 (close)

dan/rma

NATIONAL AUSTRALIA BANK