LONDON (AP) -- Markets steadied Wednesday as the immediate fallout from the inconclusive Italian elections faded and investors breathed a sigh of relief that the U.S. Federal Reserve does not appear to be changing its cheap money policy any time soon.
Stocks around the world took a battering as the Italian election results failed to deliver a knockout victory for any one party, or group of parties. Viewed as a vote against austerity and the political establishment, the split vote highlighted the scale of discontent in a country that is crucial for the future of the euro.
"After a fraught couple of days, markets are looking a little more relaxed," said Mike McCudden, head of derivatives at Interactive Investor.
Italy's FTSE MIB was the worst-hit index Tuesday, ending the day nearly 5 percent lower. It recovered slightly Wednesday as negotiations began behind the scenes on how to cobble together a government. The index was 0.4 percent higher at 15,613.
Investors remain wary, however, and that was evident in a pair of bond auctions. Though Italy raised €6.5 billion it had to pay higher interest rates to get investors to part with their cash. The country sold 10-year bonds at a yield of 4.83 percent, way up from 4.17 percent last month. The yield on five-year bonds rose to 3.59 percent from 2.94 percent.
Elsewhere in Europe, the FTSE 100 index of leading British shares was up 0.1 percent at 6,279 while Germany's DAX rose the same rate to 7,606. The CAC-40 in France was 0.4 percent higher at 3,637.
Wall Street was poised for a flat opening after a recovery on Tuesday. U.S. stocks bore the brunt of the selling on Monday when the first Italian election results starting coming through, ending the day with their worst performance of the year.
The recovery on Tuesday came after some strong U.S. economic figures and a suggestion from Fed Chairman Ben Bernanke that the central bank's low-rate policies currently pose little risk of causing runaway inflation or a stock market bubble. That eased recent jitters the Fed would start to withdraw its super easy monetary policy sooner than many investors think.
The dollar has had a strong week against the euro, particularly in the wake of the Italian election results. However, Europe's single currency got a lift Wednesday after a survey showed economic sentiment in the 17-country eurozone rising by more than anticipated in February.
The European Commission, the EU's executive arm, said its main economic sentiment indicator for the eurozone rose to 91.1 in February, from 89.5 the previous month. The expectation in the markets was for a far more modest rise to 89.9.
That helped the euro clamber above $1.31 again for a brief while. Late morning London time, it was 0.3 percent higher at $1.3100.
Earlier in Asia, Tokyo's Nikkei 225 index was the rare loser as the yen strengthened against the U.S. dollar following several months of weakness that has boosted the prospects of the country's exporters. The Nikkei fell 1.3 percent to 11,253.97, while the dollar was 0.5 percent lower at 91.75 yen.
Other Asian markets gained ground. Hong Kong's Hang Seng advanced 0.3 percent to 22,577.01 and South Korea's Kospi added 0.2 percent to 2,004.04. Australia's S&P/ASX 200 gained 0.7 percent to 5,036.60. Shares in mainland China, Taiwan and Indonesia also rose.
Oil prices were steady too, with benchmark crude for April delivery up 29 cents to $92.91 a barrel in electronic trading on the New York Mercantile Exchange.