SINGAPORE - Global stocks slid, with European shares set for a weak open on Wednesday as worries over US inflation resurfaced and bond yields spiked, boosting the dollar and keeping the yen, yuan and euro near multi-month lows.

After losses in Asia and Wall Street overnight, European bourses were due to open lower after data showed the US economy and labor market remained stable, spurring expectations that the Federal Reserve will be measured in its rate cutting cycle.

Eurostoxx 50 futures were down 0.3 percent, while German DAX futures fell 0.23 percent. Rising bond yields will probably weigh on tech stocks in Europe as well after they touched a more than five-month high on Tuesday.

Investor focus in 2025 has been on shifting US rate expectations, amid growing policy divergence between the US and other economies and the threat of tariffs once President-elect Donald Trump steps back into the White House on Jan 20.

The Fed in December projected just two rate cuts for 2025, half the number it had earlier predicted. Markets are currently pricing in 38 basis points of easing this year with the first cut fully priced in for July.

The European Central Bank, meanwhile, is expected to make deep rate cuts, with traders pricing in 99 bps of easing this year, even though euro zone inflation accelerated in December, according to data on Tuesday.

That has left the euro close to the more than two-year low of $1.022475 it touched last week. It last bought $1.035375, with investors worried the single currency may fall to the key $1 mark this year due to tariff uncertainties.

The yen was last at 158.12 per dollar after touching 158.425 on Tuesday, a level last seen in July when Tokyo intervened to support the currency. It slid more than 10 percent last year against the dollar and has had a rough start to 2025.

In stocks, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5 percent. On Wall Street, all three main indexes finished lower as the economic and jobs data stoked inflation worries.

US data underpins dollar

Data on Tuesday showed US job openings unexpectedly increased in November while hiring softened, suggesting the labor market slowed at a pace that probably does not require the Fed to be in a rush to cut rates.

"The data supports our view the US economy should achieve a soft landing this year to the benefit of risk assets while limiting the Federal Reserve to only 1-2 more rate cuts," said Mansoor Mohi-uddin, chief economist at Bank of Singapore.

Benchmark 10-year Treasury yields hit 4.699 percent after the data, the highest since April and were last at 4.681 percent.

That left the dollar index, which measures the US currency against six other major units, at 108.65, not far from last week's two-year high. The index rose 7 percent in 2024 as investors expect US rates to stay higher for longer.

Investors will now focus on the payrolls report due on Friday to gauge when the Fed will next cut rates. Non-farm payrolls probably increased by 160,000 jobs in December after surging by 227,000 in November, a Reuters survey showed.

James Knightley, chief international economist at ING, said the combination of decent growth, elevated inflation concerns and a slowing, but not collapsing, jobs market continues to see the market reducing bets on potential rate cuts this year.

"The risk is that a stronger jobs number and yet another 0.3 percent month-on-month core CPI print next week sees that being scaled back even more."

The US inflation report for December 2024 will be released on Jan 15.

In commodities, oil prices rose, with Brent crude up 0.67 percent at $77.57 per barrel, while US West Texas Intermediate (WTI) crude was 0.85 percent higher at $74.88 a barrel.