European stocks mixed in 'choppy' markets, Wall Street futures up

European stock indexes were mixed on Thursday as global recession fears weighed on markets and soaring COVID-19 cases in China countered earlier optimism about the country dropping its strict zero-COVID policy.

China's health system has been overwhelmed after the country reversed its lockdown and testing regimes earlier this month. The United States, India, Italy, Japan and Taiwan said they would require COVID-19 tests for travellers from China.

With markets thin, China and Hong Kong stocks fell, and MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.7% at 1223 GMT.

But the MSCI world equity index, which tracks shares in 47 countries, was down just 0.1% on the day.

European stocks were mixed. The STOXX 600 was flat on the day, London's FTSE 100 was down 0.1% and Germany's DAX was up 0.2%.

U.S. stock index futures pointed to a more upbeat tone on Wall Street, with Nasdaq 100 e-minis up 0.6% and S&P 500 e-minis up 0.4%.

Lower liquidity during the holiday period and a lack of news from central banks means market moves can be "choppy", lacking consistent direction, said Craig Erlam, senior market analyst at OANDA.

Erlam said that uncertainty about how China's policy reversal would affect global supply chains could become more of a focus for investors in the coming days, but that there was not enough information yet.

"We appear to just be drifting into 2023 at this point," he said.

Investors were also kept cautious due to fears of an economic slowdown. Risk appetite was subdued for much of 2022 as global central banks raised interest rates in an attempt to bring down inflation.

The S&P 500 is on track for its biggest annual drop since 2008 and many investors are predicting a recession in 2023.

Markets were pricing in a 71% chance of a 25-basis point rate hike when the U.S. Federal Reserve holds a policy review in February, with U.S. rates expected to peak in the first half of 2023.

The Fed raised interest rates by 50 bps earlier in December after delivering four consecutive 75 bps hikes in the year, but it has said it may need to keep higher interest rates for longer.

U.S. weekly jobless claims numbers are due later in the session.

The U.S. dollar index was down 0.1% at 104.23 and the euro was up 0.3% at $1.06395.

The British pound was little changed at $1.20225 .

The dollar was down 0.5% against the Japanese yen at around 133.765 .

The 10-year U.S. Treasury yield was at 3.8769%, still close to the previous session's six-week high of 3.89%.

Euro zone government bond yields were steady, with the benchmark 10-year yield up around half a basis point at 2.513%.

Japan's 20-year government bond yield jumped to its highest since 2014 after the Bank of Japan did unscheduled emergency bond-buying early in the session.

Oil prices pared losses, after falling by more than $2 earlier in the session, having been hurt by the uncertainty over China and central bank rate hikes.