* European stocks set for best day in nearly two months
* NASDAQ futures edge up after selloff in high caps
* Dollar hits highest in over two weeks
* Oil at near 7-wk high
By Tom Arnold and Wayne Cole
LONDON/SYDNEY, May 5 (Reuters) - Global shares edged up on Wednesday as U.S. stock futures steadied after a pullback in tech darlings while European markets were buoyed by accelerating business activity and positive earnings.
The Euro STOXX index .STOXX added 1.3%, heading for its best day in nearly two months, helped by data showing euro zone business activity quickened last month, while the services industry returned to growth. performers included Germany's Rational RAAG.DE and Merck (NS: PROR ) MRCG.DE after well-received numbers.
The MSCI world equity index .MIWD00000PUS , which tracks shares in 49 countries, was trading 0.1% higher after a sell-off on Tuesday from near record highs.
It wasn't all rosy, however. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS sank 0.4% for its fourth consecutive day of losses, although Asian trading was thin due to holidays in Japan, China and South Korea.
India's Nifty 50 .NSEI was 0.8% higher and headed for its best day in a week as the central bank rolled out a series of measures to support the coronavirus-ravaged economy, including allowing certain small borrowers more time to repay loans. futures NQc1 were up 0.4% after a sharp fall overnight, while S&P 500 futures ESc1 also added 0.3%.
Stretched valuations were tested when U.S. Treasury Secretary Janet Yellen said rate hikes may be needed to stop the economy overheating. later walked back the comments, but it reminded investors that rates would have to rise at some point in the future.
"Some of her comments were seemingly misinterpreted by markets as her suggesting the Fed would need to hike," said James Athey, investment director at Aberdeen Standard Investments.
"This market really is just as febrile and fragile as that."
The next focal point for markets looms on Friday when U.S. payrolls data are forecast to show a hefty rise of 978,000, while some estimates go as high as 2.1 million.
So far, Federal Reserve Chair Jerome Powell has argued the labour market is still far short of where it needs to be to start talking of tapering asset buying.
Minneapolis Fed Bank President Neel Kashkari, a notable dove, on Tuesday said it may take a few years for the economy to get back to full employment. Fed's dogged patience allowed yields on U.S. 10-year notes US10YT=TWEB to ease back to 1.59%, from last week's top of 1.69%, though the market has struggled to break below 1.53%.
In Europe, Germany's 10-year yield DE10YT=RR , the benchmark for the region, was up 1 basis point to -0.23%, although below its highest since March 2020 hit on Monday. the mention of higher U.S. rates was enough to help the dollar recoup a little of its recent losses.
The euro dropped back to $1.1999 EUR= and threatened to breach important chart support in the $1.1995/1.2000 area. A break would open the way to a retracement target at $1.1923.
The New Zealand dollar blipped higher to $0.7173 NZD=D3 when local jobs data proved stronger than expected. commodity markets, palladium XPD= rose 0.7% to $3,004, near to the record high hit on Tuesday on worries over short supplies of the metal used in emissions controlling devices in automobiles. GOL/
Oil prices climbed to multi-week peaks as more countries opened their borders to travellers, improving the demand outlook for petrol and jet fuel. O/R
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets
https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations
https://tmsnrt.rs/2Dr2BQA MSCI's World Stock Index
https://tmsnrt.rs/3nMpcL3 Daily COVID-19 case load in India
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes and Kim Coghill)
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