Wall Street is heading for a cautious advance on Wednesday, the day after a sharp drop, and the main European stock markets are retreating at mid-session, as fears of more rate hikes in both the US and Europe continue to weigh on market sentiment. Futures contracts on New York indices were up 0.22% for the Dow Jones, 0.29% for the Standard & Poor's-500 and 0.44% for the Nasdaq.

Wall Street lost more than 2% on Tuesday, its worst performance of the year, as the rebound in the US PMI index in February to an eight-month high reinforced the idea that the Federal Reserve will have to be even more restrictive to curb the economy. In Paris, the CAC 40 lost 0.41% to 7,278.95 points around 12:40 GMT. In Frankfurt, the Dax was down 0.2%, and in London, the FTSE was down 0.85%.

The pan-European FTSEurofirst 300 index fell by 0.39%, the Eurozone EuroStoxx 50 by 0.35% and the Stoxx 600 by 0.37%.

US markets may react to the release at 19:00 GMT of the minutes of the latest Fed meeting, which will be scrutinized for new indications of the mood of key monetary policymakers on the level of interest rates.

Several indicators over the past few weeks, which have illustrated the strength of the US economy in particular, have undermined the stock market rally at the start of the year, which was based on a scenario of economic slowdown capable of convincing central banks to suspend their interest rate hikes.

"The market was too optimistic," said Luca Paolini, chief strategist at Pictet Asset Management. "The economic data has been much more resilient than we all thought."

The MSCI World Index, which had rebounded by 7.1% in January, has given up more than 2% since the beginning of February, penalized by a solid US employment report, upward revisions to analysts' growth forecasts and the tenacity of inflation. STOCKS TO WATCH ON WALL STREET

STOCKS IN EUROPE

On the stock market, Danone advanced by 3.33%, as the food group posted better-than-expected fourth-quarter sales, boosted by higher prices.

Stellantis gained 1.29% after reporting better-than-expected growth in second-half operating profit.

In the red, Korian plunged 19.81% to post its biggest drop in a session since it was listed at the end of 2006, following the publication of annual results and forecasts for 2023 that were deemed disappointing.

British bank Lloyds lost 1.22% after its 2022 earnings stagnated, with higher provisions for bad debts offsetting higher revenues.

RATES

The yield on the ten-year German Bund reached its highest level in over ten years with the prospect of a higher than previously expected terminal central bank rate. It returned to 2.513% after reaching 2.57% for the first time since August 2011. The yield on the OAT with the same maturity is below the 3% threshold, following a session high since the start of the year at 3.059%.

The US equivalent peaked in mid-November at close to 4%, before falling back to around 3.921%.

FOREIGN EXCHANGE On the foreign exchange market, the dollar was stable against a basket of international currencies, and the euro traded slightly below $1.065.

OIL

The oil market is down for the third session in a row, with concerns about demand gaining momentum just hours before the release of the Fed's "minutes", which may suggest the need for further rate hikes.

Brent crude lost 0.58% to $82.57 a barrel, and West Texas Intermediate (WTI) 0.5% to $75.98.

NO MAJOR ECONOMIC INDICATORS ON TODAY'S AGENDA

(Laetitia Volga, edited by)

by Laetitia Volga