Il Nuovo Postiglione - Stock markets diverge tracking global tensions

Traders were meanwhile waiting on a decision from Russia on whether to mirror Ukraine's acceptance of a 30-day ceasefire as proposed by the United States.

"Investors remain on the edge of their seat as they weigh up the impact of tariffs and whether ceasefire talks will yield an agreement between Russia and Ukraine," noted Russ Mould, investment director at AJ Bell.

"Despite a small bounce-back last night on Wall Street, nervousness prevailed."

Gold, seen as a safe-haven investment, came close to reaching a new record high, while the dollar was fairly steady against its main rivals.

While attention has been mostly on the trade saga in recent weeks, Wednesday provided a little relief as data showed US consumer inflation slowed slightly more than expected in February -- the first full month of Trump's second term.

The report also revealed that core inflation, which excludes volatile food and energy prices, came in below consensus.

But the overriding issue for investors is Trump's trade policy, which this week saw him impose tariffs on all imports of steel and aluminium, hitting numerous nations from Brazil to South Korea, as well as the European Union.

Canada responded with more than US$21 billion in additional tariffs on US goods, while Brussels said it would target $28 billion in US goods from April.

There has been growing concern among investors that Trump's tariffs and pledges to slash taxes, regulations and immigration would reignite inflation, force the Federal Reserve to hike interest rates again and cause a recession.

Analysts pointed out that the latest inflation figures, while welcome, had to be taken in context.

National Australia Bank's Tapas Strickland said it was "worth noting the data was for February and thus largely pre-dates any potential tariff impacts".

- Key figures around 1040 GMT -

London - FTSE 100: UP 0.4 percent at 8,574.35 points

Paris - CAC 40: UP 0.5 percent at 8,030.61

Frankfurt - DAX: UP 0.2 percent at 22,725.67

Tokyo - Nikkei 225: DOWN 0.1 percent at 36,790.03 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 23,462.65 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,358.73 (close)

New York - Dow: DOWN 0.2 percent at 41,350.93 points (close)

Euro/dollar: DOWN at $1.0870 from $1.0890 on Wednesday

Pound/dollar: DOWN at $1.2951 from $1.2969

Dollar/yen: DOWN at 148.16 yen from 148.32 yen

Euro/pound: DOWN at 83.94 pence from 83.97 pence

West Texas Intermediate: DOWN 0.5 percent at $67.32 per barrel

Brent North Sea Crude: DOWN 0.5 percent at $70.61 per barrel

A.Riccobono--INP