By David Hodari and Kenan Machado 
   -- Bond yields continue to climb 
 
   -- U.S. markets set to echo Asia selling 
 
   -- Industrial goods boost European stocks 

Global stocks were on course to extend their early-week losses on Tuesday, with the volatility of recent weeks set to continue as U.S. investors returned from the holiday weekend.

The Stoxx Europe 600 edged down 0.1%, with the European banking sector down 0.8%. HSBC was down 4.1% after the bank's results undershot the expectations of analysts.

U.S. indexes, meanwhile, were set to relinquish some of last week's gains with both the S&P 500 and Dow Jones Industrial Average futures last down 0.8%. Such a move would echo weak trading in Asia-Pacific, where indexes gave up some of their early-week gains amid reduced holiday trading.

Wild swings in equities over recent weeks indicates that "what we're currently seeing is a regime shift and the pain of [monetary policy] normalization which does bring some volatility," said Christian Keller, head of economics research at Barclays. "Overall, we're facing a new situation: central banks -- like the [Federal Reserve] -- are tightening more confidently or preparing to do so, in the case of the [European Central Bank]. That's a different theme to what we've seen over the past few years."

Yields on 10-year German government bonds rose to 0.754% from 0.733% late Monday, although banking stocks -- which would normally benefit from such a move -- slipped from Monday's gains. Bond yields move inversely to prices.

Last week's rally saw the Stoxx Europe 600 enjoy its largest on-the-week climb since late 2016, while the S&P 500's weekly increase was its largest since 2013. However, the Stoxx 600 is still down 4.3% so far in February, and the S&P 500 is down 3.9%.

Yields on 10-year German government bonds rose to 0.748% from 0.733% late Monday, although banking stocks -- which would normally benefit from such a move -- slipped from Monday's gains. Bond yields move inversely to prices.

In a similar move, U.S. 10-year Treasurys were up to 2.916% from last week's closing level of 2.877%, a four-year high at the time.

That bond market optimism was noteworthy after a tumultuous few weeks for stock markets, in a signal that fears about inflation, rather than growth, have underpinned recent turbulence.

Rising inflation in the U.S. and Europe has prompted investors to second-guess central bank guidance amid speculation that those institutions will end the accommodative policies which have supported equity markets in recent years, said Larry Hatheway, chief economist at GAM Investments in a note.

While European stocks were higher, Japan's Nikkei closed 1% down, giving up some of its early-week rise thanks to weakness in its electronics and banking sectors. Selling came despite a slip in the yen versus the dollar, with the greenback up 0.3% at Yen107.0720.

South Korea's Kospi fell 1.1%, dragged lower by index heavyweight Samsung Electronics, which dropped 2% after falling 1.3% on Monday. That followed a near-10% climb last week.

The Hang Seng Index pared an early slide on its first full day of trading in nearly a week. The main benchmarks in Singapore and New Zealand both 0.3%.

With Chinese and Taiwanese markets still closed for the Lunar New Year holiday, investors should be cautioned against reading too much into recent price action due to thin volumes.

Brent crude oil futures fell 0.7% but remained up so far this week, while aluminum escaped metals-sector selling in the metals sector in the wake of comments from the Trump administration late last week that it was considering imposing import tariffs.

Write to David Hodari at David.Hodari@dowjones.com and Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

February 20, 2018 06:02 ET (11:02 GMT)