Stock markets built on the week's rally Wednesday, boosted by US stimulus hopes and signs of easing virus infections -- as well as improvements across vaccination programmes.

A recovery for equities from last week's rout was tempered however by worries that valuations might a little frothy, analysts said.

While most indices rallied, Hong Kong and Shanghai were hit as China's central bank sucked more cash out of financial markets to avert a bubble.

London meanwhile flattened by the half-way stage.

Oil prices held up after hitting a pre-pandemic high on Tuesday, but there are worries the improvement will give producers an excuse to begin hiking output again.

The dollar advanced, while Wall Street will be looking to build on Tuesday's strong gains when it reopens.

"This week sees a return to more normalised drivers of sentiment, with US stimulus, vaccinations, and the prospect of an economic recovery back at the forefront," noted Joshua Mahony, senior market analyst at IG trading group.

The Milan stock exchange meanwhile shot three percent higher on expectations that former ECB chief Mario Draghi will be appointed Italy's prime minister -- duly confirmed in the early afternoon.

Draghi is credited with saving the eurozone in 2012 at the height of the debt crisis during his role as head of the European Central Bank.

In the US, the Senate on Tuesday took a tentative step towards pushing through a massive economic aid package proposed by President Joe Biden.

The development came as data showed infections and deaths in the United States -- the worst-hit country -- appeared to be easing.

Experts said this was owing to better adherence to mask-wearing and social distancing, and the end of the holiday season.

Vaccination programmes in the United States and Britain were picking up pace, although the European Union was struggling to get up to speed owing to supply problems.

The University of Oxford on Wednesday said its vaccine produced with AstraZeneca significantly reduces virus transmission and is highly protective after a single dose.

British pharmaceutical group GlaxoSmithKline and German biotech firm CureVac meanwhile announced plans to jointly develop a coronavirus vaccine with the potential to counter multi-variants of Covid-19.

London - FTSE 100: FLAT at 6,507.18 points

Frankfurt - DAX 30: UP 0.6 percent at 13,922.30

Paris - CAC 40: UP 0.3 percent at 5,578.88

EURO STOXX 50: UP 0.7 percent at 3,614.63

Tokyo - Nikkei 225: UP 1.0 percent at 28,646.50 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 29,307.46 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,517.31 (close)

New York - Dow: UP 1.6 percent at 30,687.48 (close Tuesday)

Euro/dollar: DOWN at $1.2018 from $1.2043 at 2205 GMT

Dollar/yen: UP at 105.06 yen from 104.96 yen

Pound/dollar: DOWN at $1.3628 from $1.3664

Euro/pound: FLAT at 88.11 pence

West Texas Intermediate: UP 0.7 percent at $55.14 per barrel

Brent North Sea crude: UP 1.0 percent at $58.01 per barrel

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