* Global stocks flat, earnings support Europe, US futures fall
* Chinese stocks fall further as Beijing rushes to fight COVID
* Dollar hits new 2-year high on China COVID fears, Fed bets
* Yuan above 1-year low after PBOC cuts foreign reserve ratio
* Chart: Overall asset performance http://tmsnrt.rs/2yaDPgn
*Graph: world exchange rates http://tmsnrt.rs/2egbfVh
By Chris Prentice and Danilo Masoni
WASHINGTON/MILAN, April 26 (Reuters) – Global stocks reversed earlier gains on Tuesday and Wall Street tumbled as investors awaited Big Tech earnings and concerns about global growth lingered.
China’s COVID-19 curbs and fears of aggressive US Federal Reserve tightening continued to dampen risk appetite and lifted the dollar to new two-year highs.
The MSCI benchmark for global equity markets fell 1.21% to 660.49 at 1447 GMT. The continent-wide STOXX 600 index fell 0.31%, reversing gains seen as earnings from companies such as Swiss bank UBS and shipping giant Maersk boosted sentiment. Emerging market equities gained 0.26%.
The Dow Jones Industrial Average fell 438.09 points, or 1.29%, to 33,611.37; the S&P 500 lost 73.1 points, or 1.70%, to 4,223.02; and the Nasdaq Composite lost 347.48 points, or 2.67%, to 12,657.37.
China’s blue chip index fell another 0.8% after its worst day in two years on Monday, even as the central bank pledged to step up cautious monetary policy support, especially for smaller businesses affected by COVID-19.
Three-quarters of Beijing’s 22 million people lined up for COVID-19 tests as the Chinese capital rushed to stamp out a nascent outbreak and avoid the citywide lockdown that weakened Shanghai for a month .
News that Elon Musk had reached a deal to buy Twitter for $44 billion in cash boosted tech stocks on Monday. U.S. stocks had rebounded in late trading on Monday after trading lower for much of the session.
“Apart from this late story, it was difficult to find a narrative for the strong rebound. Tech stocks will remain front and center” as earnings rise this week, analysts at Deutsche Bank Research said in a note.
Hong Kong’s tech sector rebounded 2.9%, boosted by big companies such as Tencent and Alibaba.
Nervousness over China’s economic slowdown hit Australian equities, with the benchmark down 2.1%, hurt in particular by the drop in miners.
“There is a little fear of growth, but in our view there will be no immediate slowdown in growth or inflation,” said Mike Kelly, head of global multi-assets at PineBridge Investments. .
“We’ve seen that the European services PMI has surprised on the upside and that China, despite making terribly slow progress on the stimulus, continues to move in the direction of trying to speed things up,” he added.
But Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas, said if Chinese lockdowns persisted, it would significantly affect the Chinese economy, impacting global supply chains.
Markets are also concerned that an aggressive rate of tightening from the US Fed could derail the global economy, which has only just begun to recover from the pandemic.
The Fed is expected to raise rates by half a percentage point at each of its next two meetings.
“It is unrealistic to think that the United States can raise interest rates in this way without looking at the real economy,” said Carlo Franchini, head of institutional clients at Banca Ifigest, adding that he was also worried. warmongering signals in Europe.
The European Central Bank’s Martins Kazaks have joined a chorus of policymakers calling for a quick exit from stimulus, suggesting the bank should raise rates soon and has room for up to three hikes this year.
“A rate hike right now would be madness. … It would only further tighten demand, reduce consumption and drive the economy into stagflation, which I think is a much more likely scenario than you don’t think so,” Franchini added.
Yields on US Treasuries fell on Tuesday as uncertainties surrounding the war in Ukraine and the Fed’s efforts to curb inflation prompted investors to remain cautious about the future despite better-than-expected economic data.
The yield on benchmark 10-year Treasuries fell to 2.7319%, while yields on three-month Treasuries and 30-year bonds were all lower at the start of US trade.
German 10-year yields, the benchmark for the euro bloc, also fell, trading at 0.804%, after falling more than 11 basis points the day before.
In the currency markets, the dollar rose against a basket of rivals to new highs in two years and was last up 0.45%.
China’s offshore yuan rose 0.1% to 6.5622 to the dollar, remaining above Monday’s low for the year at 6.6090 after the People’s Bank of China announced it would cut the amount of foreign currency that banks must hold as reserves.
Oil prices stabilized after the previous session’s 4% plunge as traders weighed concerns over Russian supply and Chinese demand. Brent crude rose 1.13%, while US crude gained 1.36% to $99.01 a barrel.
Spot gold edged higher as investors searched for safe-haven assets. Prices rose 0.43%. Palladium prices rose 2.81% after Monday’s sharp decline on Chinese demand concerns.
(Reporting by Danilo Masoni in Milan and Xie Yu in Hong Kong; additional reporting by Sujata Rao in London and Anisha Sircar in Bangalore; editing by Clarence Fernandez, Mark Potter and Jonathan Oatis)