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Shares dip after recent jump

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Nvidia ( NVDA ) results in focus

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40-year Japanese government bond auction sees tepid demand

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Dollar inches higher

By Samuel Indyk and Rocky Swift

LONDON, May 28 (Reuters) - European shares were a touch

softer on Wednesday after Tuesday's advance, while the dollar

was supported by promising signs on the United States' trade

talks and there were hopes earnings from major chipmaker Nvidia ( NVDA )

later in the day could light a rally.

Investors were cautiously optimistic that trade frictions

between the U.S. and Europe might be easing, but long-term

yields rose again as a lacklustre auction of Japan's

longest-dated bonds underscored lingering fiscal deficit

concerns.

U.S. President Donald Trump said on Tuesday that the

European Union's move to set up talks was positive, after he

walked back plans to impose 50% tariffs on goods from the bloc.

"They are major trading partners, so I'm optimistic there

will be some sort of agreement in the end," said George

Lagarias, chief economist at Forvis Mazars.

Europe's STOXX 600 was down 0.2%, having risen over

the last two days on the back of Trump's EU tariff pause. It was

still up over 1.3% for the week.

Britain's FTSE, France's CAC 40 and

Germany's DAX also slipped around 0.2%, the last after

earlier touching another new record.

In the U.S., attention turned to chipmaker Nvidia ( NVDA ), the last

of the "Magnificent 7" tech companies to report earnings this

season.

"There is renewed confidence that Nvidia ( NVDA ) can beat the

consensus estimates," said Chris Weston, head of research at

Pepperstone.

If Nvidia ( NVDA ) comes through with better-than-expected sales and

profit margins "the rally is on", Weston added.

The chipmaker is expected to report that first-quarter

revenue surged 66.2% to $43.28 billion, according to data

compiled by LSEG.

Ahead of the results, Nasdaq futures rose 0.2%,

while S&P 500 futures were up 0.1%.

In Asia, MSCI's broadest index of Asia-Pacific shares

outside Japan finished little changed. Japan's

Nikkei ended flat, after advancing for the previous

three sessions.

China's CSI300 blue-chip index slipped 0.1%, while

Hong Kong's Hang Seng Index fell 0.6%.

EYES ON BOND YIELDS

A rise in longer-dated bond yields resumed on Wednesday amid

rising concerns about fiscal sustainability in many major

markets, including the U.S., Japan and Britain.

Those concerns escalated in recent weeks after the U.S.

sovereign rating was downgraded by Moody's and as Trump's bill

for large-scale tax cuts passed in the House, before moving to

the Senate.

George Lagarias, chief economist at Forvis Mazars, said

investors were worried about "U.S. fiscal incontinence and an

apparent repudiation of fiscal discipline."

He added: "Because they have the global reserve currency,

(the U.S.) is testing their ability to borrow as much as they

can, but ultimately there is only so much the markets can

handle."

Japanese bond yields rose overnight following tepid demand

for an auction of 40-year notes, with the 40-year JGB yield

rising 4 basis points to 3.335%. Bond yields move

inversely to prices.

That lifted long-end yields across the globe, with the U.S.

30-year yield up 3.5 bps to 4.9748% and the 10-year yield

up 3 bps to 4.4654%.

In currency markets, the dollar index, which tracks

the U.S. currency against a basket of six peers, was inching

0.1% higher after a 0.6% rally the day before. The euro was flat

at $1.1323.

The kiwi dollar rose 0.3% to $0.5969 after the

Reserve Bank of New Zealand cut rates by 25 basis points as

expected, but signalled it might be nearer to the end of its

current easing cycle than the market had expected.

Oil prices ticked up as the U.S. barred Chevron ( CVX )

from exporting crude from Venezuela under a new authorisation on

its assets there, raising the prospect of tighter supply.

Brent crude futures rose 0.8% to $64.59 a barrel,

while U.S. crude advanced 0.8% to $61.39 per barrel. Spot

gold rose 0.4% after dropping more than 1% on Tuesday.