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LONDON   - European stock indexes rose after a shaky start on Wednesday and Wall Street futures were mixed, as the optimism with which markets started the year showed some signs of waning while investors waited for key Federal Reserve meeting minutes to be released.

Equities fell in the Asian session, following a 1.3% drop in the Nasdaq on Tuesday, as higher U.S. Treasury yields hurt technology stocks.

With investors expecting the Federal Reserve to begin hiking interest rates as early as March, U.S. Treasury yields jumped on Monday and Tuesday. But on Wednesday they pulled back slightly, with the U.S. 10-year yield at 1.6491% at 1205 GMT, compared to the previous session's peak of 1.686%, which was the highest since late November.

The shift in market focus back to prospects for U.S. rate hikes has revived a rotation out of growth-sensitive stocks, such as tech firms, into ones that offer income, such as financials and industrials.

In Hong Kong, tech shares were also hit by China's fines on Alibaba, Tencent and Bilibili.

But in Europe, the STOXX 600 was up 0.1% at 1206 GMT, having come close to but not exceeded the all-time high hit in the previous session.

The FTSE 100 was up 0.2%, Germany's DAX was up 0.7% and France's CAC 40 was up 0.5% .

But Wall Street futures pointed to risk appetite faltering somewhat, with S&P 500 e-minis down 0.1% and Nasdaq e-minis down 0.3%.

"It’s still very much start of the year mode," said Peter Chatwell, head of multi-asset strategy at Mizuho.

"Risk appetite is, as is seasonally the case, strong at this point and the consensus view is that there is good upside still in equity markets."

With inflation having surged in the past six months, investors will be looking at the minutes from the Fed's December meeting, released at 1900 GMT, for signs of policymakers' willingness to tighten monetary policy.

"In our mind it's all about the degree to which the evidence in the minutes suggests that the majority of the committee is looking for a faster-than-expected pace of balance sheet reduction," Mizuho's Chatwell said.

Chatwell said he expected U.S. and UK rates would go higher this year, diverging from the "low-inflation economies", Europe and Japan.

PMI data showed French services sector growth in December came in slightly below an initial estimate, while activity in Spain's services sector grew in December at the slowest pace since April.

Restrictions to contain the coronavirus also dampened activity in Germany's services sector in December.[nL1N2TL0IC]

Investors remain generally calm about the economic impact of the Omicron variant of COVID-19, with analysts noting studies suggesting the risk of hospitalisation is lower.

The World Health Organization said that evidence suggested Omicron is causing milder symptoms than previous variants.

But as infections soar, the number of hospitalised COVID-19 patients in the United States has risen nearly 50% in the past week.

Hong Kong's leader Carrie Lam announced new restrictions, including a two-week ban on flights from countries including Britain and the United States.

European government bond yields were little changed, with Germany's 10-year yield having hit a two-month high at -0.114%.

The U.S. dollar was down around 0.3% on the day, having edged down below recent two-week highs. The yen recovered partly from its recent 5-year low.

In cryptocurrencies, bitcoin was up 0.8% at $46,191.53 - still significantly below its most recent all-time high of $69,000 reached in November.

Oil prices slipped below $80 a barrel.