World stocks edged higher on Friday as hopes of an economic recovery helped offset the blow dealt by news that the US Treasury was ending emergency loan programmes.
But gains were modest as flare-ups in virus cases around the world continued to dampen the sentiment.
California announced fresh curfews to try to fight surging coronavirus infections, while Japan is facing a third wave of the virus and parts of Europe are already under recently-renewed social restrictions.
Europe's STOXX 600 edged 0.3 per cent higher in early trading, while the global stocks index was also 0.1 per cent firmer and on course for its third weekly gain in a row.
S&P 500 futures slipped 0.4 per cent while Dow futures fell 0.4 per cent, cancelling out a firmer lead from a strong Wall Street session overnight.
The dollar edged up and the 10-year Treasury yield slipped to the lowest in 10 days at 0.818 per cent, before marginally recovering in later trading.
In Asia, Japan's Nikkei stumbled 0.4 per cent, weighed down by a rise in new domestic coronavirus infections to record highs. Chinese shares were 0.3 per cent stronger.
In a letter to US Federal Reserve Chair Jerome Powell, US Treasury Secretary Steven Mnuchin said the $455 billion allocated to Treasury under the CARES Act should be instead available for Congress to reallocate.
Mr Mnuchin's decision added to market anxiety about broader economic growth as data shows the early recovery from a historic plunge in the US economy is fading, with more than 10 million who had jobs in January still out of work.
Investor sentiment was also hit by data that showed Covid-19 hospitalisations across the US jumped by nearly 50 per cent in the last two weeks, threatening the recovery of the world's largest economy, as cities and states began to impose lockdowns.
Meanwhile, oil prices were little changed on Friday, and on track for a third consecutive weekly rise. However, demand concerns stemming from surging coronavirus cases and renewed lockdowns in several countries capped gains.
Prospects of an effective Covid-19 vaccine, and hopes that Opec and its allies will keep production in check, have bolstered oil markets this week.
Brent crude futures were up 0.05 per cent at $44.22 a barrel.
The oil markets have trimmed their weekly gains as the virus surge “throws a wet blanket over vaccine optimism”, said Stephen Innes, chief global market strategist at Axi.
