Global stock markets were mixed Wednesday with Wall Street opening flat after European bourses rebounded with a mixed showing by Asia.

Data revealed China slipped into deflation, compounding worries about the world's second biggest economy after the United States.

"Chinese economics dominates the headlines," noted Steve Clayton, head of equity funds at Hargreaves Lansdown.

"China is now witnessing the actual cost of goods both in stores and at the factory gate falling. It is indicative of a significant slowdown in the Chinese economy, which is beset by high levels of indebtedness."

The 0.3-percent drop in China's July consumer prices was the first since the start of 2021 and comes as slowing domestic spending weighs on the country's economic recovery.

Investors were already in a dour mood a day after China announced its biggest drop in exports since the beginning of the Covid pandemic more than three years ago, while imports also tanked owing to slimming demand at home.

An extended period of disappointing indicators out of Beijing this year has ramped up pressure on authorities to provide much-needed support to the economy.

However, while leaders have made a number of pledges in recent weeks to introduce stimulus -- particularly for the property sector -- there have been very few concrete moves save for some small interest rate cuts by the People's Bank of China.

Observers warned that the headline-grabbing bazooka officials have unleashed in the past is unlikely owing to the country's huge debt pile and concerns about an already weak yuan.

- CPI implications -

Stocks on Wall Street were flat at the open, as investors await the release of US consumer price inflation later in the week.

"On Thursday, the July Consumer Price Index will be released before the start of trading and it, too, will cause a buzz because of the implications it will hold for the Fed's thinking on its next monetary policy step," said Patrick J. O'Hare from Briefing.com

European bank shares recovered one day after sliding when Italy imposed a windfall tax on lenders and owing to concerns over the health of the sector in the United States.

Shares in BNP Paribas rose by 1.9 percent in Paris, by 0.9 percent in Commerzbank in Frankfurt and by 1.7 percent in Madrid's Banco Sabadell.

"Everything that had fallen on the back of yesterday’s announcement from the Italian government of a surprise windfall tax on bank profits, reversed," said Fawad Razaqzada, market analyst at City Index and FOREX.com.

"There was little clarity on the details of the new tax, but now that the government confirmed that the levy won’t exceed 0.1 percent of each bank's asset, this was met with relief."

- Key figures around 1340 GMT -

New York - Dow: FLAT at 35,275.74 points

London - FTSE 100: UP 0.7 percent at 7,527.42  

Frankfurt - DAX: UP 0.6 percent at 15,861.69

Paris - CAC 40: UP 0.8 percent at 7,319.05

EURO STOXX 50: UP 0.7 percent at 4289.02

Tokyo - Nikkei 225: DOWN 0.5 percent at 32,204.33 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 19,246.03 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,244.49 (close)

Euro/dollar: UP at $1.0987 from $1.0957 on Tuesday

Pound/dollar: DOWN at $1.2740 from $1.2745 

Euro/pound: UP at 86.19 from 85.95 pence 

Dollar/yen: DOWN at 143.33 yen from 143.40 yen

Brent North Sea crude: UP 0.9 percent at $87.01 per barrel

West Texas Intermediate: UP 1.2 percent at $83.92 per barrel

dan/rox/cw