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New York - World stocks came off early highs and oil retreated on Friday after China raised bank-required reserves to a record, prompting worries that tightening efforts aimed at battling inflation could slow down global growth and curb demand for commodities.
US stocks opened little changed after recent advances pushed indexes to more than 30-month highs and as Wall Street eyed a third week of gains.
The Dow Jones industrial average was up 15.63 points, or 0.12%, at 12 333.05. The Standard & Poor's 500 Index dipped 0.11 points, or 0.01%, at 1 340.30. The Nasdaq Composite Index was up 1.71 points, or 0.07%, at 2 833.34.
The MSCI all-country world stock index was 0.2% higher after earlier hitting a fresh 30-month high.
China raised banks' required reserves by 50 basis points on Friday, the second such increase this year as it continues the fight against inflation.
"They have been trying to curb liquidity for some time, so little surprise and not as bad as a benchmark rate rise, but still slightly weighing on sentiment," said Andrey Kryuchenkov from VTB Capital.
Brent crude futures were $1.16 lower at $101.44 a barrel, down from earlier highs of $103.5 a barrel. US March light crude futures, however, traded higher at 87.43 a barrel.
China has also increased interest rates three times in the past four months and ordered banks to issue fewer loans. But its annual inflation still rebounded to 4.9% in January from 4.6% a month earlier.
In Paris, China rejected plans to use real exchange rates and currency reserves to measures global economic imbalances, casting doubt on the ability of Group of 20 major economic powers to reach agreement at a meeting on Friday.
European shares fell slightly, though still hovering near 29-month highs, with miners among the worst performers after China's move to raise banks' reserve requirements.
Rising inflation, meanwhile, was underlined by German producer prices for January exceeding forecasts to post their strongest year-on-year rise since October 2008, up 5.7%.
The euro edged higher against the dollar after a senior European Central Bank official was quoted by a media report as saying that interest rates could be raised.
Oil in focus
Oil prices - and their impact on global inflation - remained in focus as protesters in Bahrain and Libya bury people killed in recent clashes.
In Libya's eastern city of Benghazi early on Friday, thousands of anti-government protesters crowded on to the streets, a day after demonstrations led to skirmishes with security forces in which more than 20 people may have been killed.
Tension between Israel and Iran also continued over the latter's plans to send navy ships through the Suez Canal, a move that Israel has called a "provocation".
Sterling rose on market talk that another member of the Bank of England's Monetary Policy Committee had moved into the hawks' camp by voting for a rate rise in February.
Minutes of the February meeting, at which the bank left rates on hold at a record low of 0.5% despite rising inflation, are due for release on Wednesday.
Concerns Portugal may need a bailout - possibly by April - dominated euro zone sovereign bond markets, with the yield on the country's five-year debt hitting a euro-era peak for a second session running.
