(Adds U.S. market open, byline, dateline; previous LONDON)
* European shares add to best gains in nearly a month
* Wall Street mixed as new virus cases offset growth hopes
* Mood restrained by surge in virus cases, China-India spat
NEW YORK, June 17 (Reuters) - Equity markets around the world seesawed on Wednesday as the prior day’s rally on economic and vaccine hopes faded, while fresh coronavirus outbreaks and rising geopolitical tensions in Asia boosted demand for the dollar and safe-haven debt.
Optimism over a quick economic recovery has been tempered by more global cases of the coronavirus, with an outbreak in Beijing and a rising tide of infections in U.S. states that are reopening their economies giving investors pause.
U.S. Treasury yields edged lower and crude prices fell on concerns over the fresh outbreaks, but drew some support from stimulus measures and positive tests of a drug trial for dexamethasone that could save some critically ill COVID-19 patients.
The dollar rose from early lows as investors wary of wider geopolitical risks sought its relative safety ahead of remarks by Federal Reserve Chair Jerome Powell during a second day of testimony before Congress.
Rising tensions between North Korea and South Korea spurred demand for safe-havens, as did clashes between Indian and Chinese troops at a disputed border site.
After the sharp 50-day rally in equities from March lows, a period of several months where the market doesn’t do much can be expected, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“We’re seeing that struggle, that tug of war, that friction play out already this month,” Arone said. “June hasn’t been a straight shot to the moon. That’s what you’re likely going to see for the balance of the summer, not a bad thing.”
European shares climbed further, adding to their best gains in almost a month a day earlier, but the Nikkei in Tokyo eased 0.5% after posting its biggest daily gain in three months the prior day.
MSCI’s gauge of stocks across the globe gained 0.20% but was likely to be pulled lower as U.S. stocks, which account for more than half the world benchmark’s performance, were mixed.
The pan-European STOXX 600 index rose 0.67% and emerging market stocks rose 0.32%.
On Wall Street, the Dow Jones Industrial Average fell 41.27 points, or 0.16%, to 26,248.71 and the S&P 500 gained 0.63 points, or 0.02%, to 3,125.37. The Nasdaq Composite added 49.49 points, or 0.5%, to 9,945.36.
Chinese blue chips recovered from an early dip to finish steady despite Beijing’s worst resurgence in COVID-19 cases in four months.
“The tension between better economic data and rising COVID-19 cases continues to drive market volatility,” said Antoine Bouvet, senior rates strategist at ING in London.
The dollar index rose 0.319%, with the euro down 0.44% to $1.1213. The Japanese yen strengthened 0.08% versus the greenback at 107.27 per dollar.
Thirty-year Treasury yields were up 2 basis points at 1.55%, having risen by the most in a month on Tuesday, while 10-year German Bunds led similar moves across Europe.
Oil prices swung in and out of the red amid an increase in U.S. crude inventories. They had climbed 3% on Tuesday after the International Energy Agency (IEA) raised its oil demand forecast for 2020.
U.S. crude fell 1.38% to $37.85 per barrel and Brent was at $40.60, down 0.88% on the day.
Additional reporting by Dhara Ranasinghe in London; Editing by Bernadette Baum