Global shares have struggled to advance while investors digested news of an unexpected cut in Chinese interest rates as data pointed to faltering growth in the world's second-largest economy, sending oil prices nearly two per cent lower.
Weaker US stock index futures also weighed on sentiment, while a steadier dollar knocked gold.
The MSCI all-country index was barely firmer on Monday, a month-long advance having whittled away the benchmark's decline for the year to about 13 per cent.
China's central bank cut key lending rates to revive demand as data showed the economy unexpectedly slowing in July, with factory and retail activity squeezed by Beijing's zero-COVID policy and a property crisis.
Until now, investors have been grappling with how much further central banks in the United States and Europe would hike rates when they meet next month.
Hopes of smaller rate hikes on signs that US inflation may be peaking helped Wall Street clock up its fourth straight week of gains by Friday.
The gains on Wall Street and steady growth figures for Japan helped the Nikkei share average in Tokyo jump to its highest in more than seven months.
Markets are still implying around a 50 per cent chance the Fed will hike by 75 basis points in September and that rates will rise to around 3.50-3.75 per cent by the end of the year.
The Fed will publish minutes on Wednesday from its last rate-setting meeting, but investor hopes of them showing the central bank beginning to pivot on rate hikes could be dashed.
In Europe, the STOXX share index of 600 leading companies was up 0.13 per cent at 441.43 points, still down around 10 per cent for the year.
S&P 500 futures and Nasdaq futures were both down around 0.5 per cent after last week's gains.
Earnings from major retailers, including Walmart and Target, will be scrutinised for signs of flagging consumer demand.
The cut in Chinese interest rates failed to stop Chinese blue chips easing 0.13 per cent, while the yuan and bond yields also slipped.
Geopolitical risks remain high with a delegation of US lawmakers in Taiwan for a two-day trip.
The bond market still seems to doubt the Fed can manufacture a soft landing, with the yield curve remaining deeply inverted. Two-year yields at 3.27 per cent are well above those for 10-year notes which were trading at 2.86 per cent.
Those yields have underpinned the US dollar, though it did slip 0.8 per cent against a basket of currencies last week as risk sentiment improved.
But on Monday the dollar regained some poise, with the euro down 0.2 per cent against the greenback at $US1.02345 after bouncing 0.8 per cent last week. Against the yen, the dollar steadied at 133.51 after losing 1 per cent last week.
Gold was down 0.8 per cent at $US1,786, losing nearly all of its one per cent gains last week.
Oil prices eased as China's disappointing data added to worries about global demand for fuel.
Brent slipped 1.8 per cent to $US96.35, while US crude fell 1.9 per cent to $US90.34 per barrel.
Australian Associated Press
