A three-day sell-off in world stocks slowed on Tuesday, with the U.S. earnings season about to start and gains in China signaling a return of emerging-market demand.

GloEuropean shares and bonds both opened cautiously, amid renewed tension in Ukraine and signs the European Central Bank may not be as eager to begin large-scale stimulus as had been hoped.

The region's main bourses in London .FTSE, Paris .FCHI and Frankfurt .GDAXI were down 0.1 to 0.2 percent. Euro zone bond yields inched higher and the euro rose to its highest in a almost a week.

"The QE (quantitative easing) talk continues to be very much in focus in Europe. The ECB is clearly tempering the expectations, and I think the Ukraine news is also contributing to the weakness," said Jan von Gerich, the chief developed markets strategist at Nordea in Helsinki.

Earlier, Asian stocks had managed to shrug off the gloom of a third day of sizable losses on Wall Street. Chinese shares .CSI300, particularly those of banks, rose on stimulus hopes and helped to take MSCI's benchmark emerging market index .MSCIEF to its highest since mid-December.

Emerging markets have rebounded in the past two weeks. Investors appeared to put aside worries about geopolitics, slowing U.S. stimulus and China's stuttering economy.
But Japan's Nikkei .N225 fell 1.4 percent on concern over a decline by global tech stocks.

The yen also rose as the Bank of Japan kept its policy steady on Tuesday and offered little to suggest more stimulus was likely in the near term.

UKRAINE STRAINS

The latest Wall Street shakeout comes as investors prepare for the first-quarter corporate earnings season, which begins later when resources giant Alcoa reports results.

Rising tensions in Ukraine also tempered investor appetite for risk. Pro-Moscow protesters in eastern Ukraine seized arms in one city and declared a separatist republic in another. Ukraine on Monday called the moves part of a Russian plan to justify an invasion.

Against the yen, the dollar fell about 0.3 percent to 102.73 yen, well off the 2 1/2-month high of 104.13 yen it reached on Friday.

The euro also bumped lower, down about 0.2 percent to 141.38 yen. But it was up against the dollar at 1.3763, rebounding from Friday's five-week low of $1.3672.

It came after some of the ECB's more conservative members suggested on Monday that the central bank was not yet ready to begin the kind of asset-buying programs the United States, Japan and Britain have used.

"QE is definitely something that the ECB has been discussing, but we still think the bar to full blown-purchases of government bonds is still very, very high," said Vasileios Gkionakis Global head of FX strategy at UniCredit in London.

In commodity markets, gold was trading around two-week highs, up about 0.9 percent from the previous session at $1,309.24 an ounce.

U.S. crude for May gained about 0.9 percent to $101.35 a barrel, pushed up by the renewed tensions over Ukraine, a major supply route for Russian gas to Europe. But the rise was capped by expectations of a U.S. crude oil stock build-up.
May Brent crude rose about 0.5 percent to $106.35 a barrel.

(Reporting by Marc Jones; Editing by Larry King)