Updates prices, adds details

By Danilo Masoni and Tom Westbrook

MILAN/SINGAPORE, July 15 (Reuters) - World shares steadied on Wednesday as upbeat earnings from chipmaking equipment maker ASML revived the AI trade, helping offset concerns about the fallout from fresh hostilities involving Iran and a surge in oil prices.

Europe's STOXX 600 .STOXX index was just below parity by 1142 GMT after rallying the previous day when softer-than-expected U.S. inflation data cooled concerns about higher interest rates, pushing the dollar and yields lower.

Tech-heavy markets in the U.S. and Asia fared better.

Nasdaq NQc1 futures rose 0.5%, alongside a 0.1% gain in S&P 500 futures ESc1, signalling a firmer open on Wall Street as investors assessed a fresh wave of corporate earnings.

"The divergence between the U.S. and Europe seems to be driven mainly by technology stocks, which are outperforming again," said Swissquote senior analyst Ipek Ozkardeskaya. "ASML's results came in sweet."

The world's biggest supplier of chipmaking equipment ASML.AS raised its 2026 forecasts and announced plans to expand capacity, as demand linked to artificial intelligence helped the company beat quarterly earnings expectations.

Its shares rose as much as 8% in Amsterdam .AEX, helping lift other AI-related stocks after recent volatility caused by concerns that valuations and AI spending expectations had outpaced fundamentals. They pared gains and were last up 4%.

The MSCI World Price Index .MIWO00000PUS was broadly unchanged. South Korea's tech-heavy KOSPI .KS11 index was up over 6%, with memory chip maker SK Hynix 000660.KS jumping 8.8% in Seoul. Japan's Nikkei .N225 gained 1.5%.

On Tuesday, the U.S. headline consumer price index fell 0.4% in June, its first decline since the COVID-19 pandemic, while core inflation for the month was flat.

Bond yields and the dollar fell after the data, leaving the euro EUR= steady above $1.14 on Wednesday.

Two-year Treasury yields US2YT=RR edged up 2.4 basis points (bps) to 4.21% on Wednesday but remained roughly 8 bps below Tuesday's 17-month high.

"For market bulls this is even better than Goldilocks could have imagined," J.P. Morgan analysts said in a client note.

"This print should remove any fears over a July rate hike and may assuage fears on September, too. This sets up the market to move higher and to broaden as it does so."

Further gains were tempered after Federal Reserve Chair Kevin Warsh told Congress that one benign inflation reading was not enough to declare victory over inflation.

Investors will closely watch his testimony later on Wednesday, along with U.S. producer price data and the Fed's Beige Book, for further clues on the policy outlook.

In Europe, Germany's 2-year yields DE2YT=RR rose 1 bp to 2.75%, but remained below Tuesday's 2-year high.

EARNINGS ON THE RADAR

Meanwhile the U.S. earnings season kept surprising on the upside following a strong start to the reporting season from some Wall Street banks that buoyed risk sentiment.

Morgan Stanley MS.N reported a rise in second-quarter profit, driven by strong mergers and acquisitions activity despite macroeconomic uncertainty, sending its shares up 2.8% in premarket trading.

BlackRock BLK.N also reported a jump in quarterly profit, as a stock market rally boosted the value of client assets, while healthcare conglomerate Johnson & Johnson JNJ.N beat Wall Street estimates for sales and profit.

The Bank of Canada's policy decision is also due later on Wednesday, with the benchmark rate widely expected to remain unchanged. The Canadian dollar was broadly steady above 1.40.

Oil extended gains on Wednesday as President Donald Trump reimposed a naval blockade on Iranian ports and Iran's Islamic Revolutionary Guard Corps threatened to close export corridors that benefit the U.S. and its allies.

Brent futures LCOc1 climbed 0.7% to $85.3 a barrel.

In China, annual economic growth slowed sharply to 4.3% in the second quarter, missing analysts' expectations as weak domestic demand outweighed stronger production and exports.

A rebound in Chinese retail sales in June, relatively strong nominal GDP and hopes that authorities will respond were the positives for investors.

"I don't think they will be worried enough to announce any big stimulus, but it is going to be targeted, since they are aware that growth is only for the tech areas whereas the broader economy is continuing to underperform," said UOB economist Woei Chen Ho.

China's yuan CNY=CFXS traded at 6.771 to the dollar, just below a one-month high.

Spot gold XAU= was down 0.6% at $4,029.3 per ounce, paring part of Tuesday's more than 2% surge as higher oil prices fuelled inflation concerns and uncertainty over the U.S. rate outlook.