* Fed expected to hold rates steady

* Fresh Middle East strikes push oil prices higher

* SK Hynix ( SKHY ) earnings fail to soothe anxiety

* Eyes on slate of big tech earnings

(Updates with European trading)

By Niket Nishant and Ankur Banerjee

July 29 (Reuters) - Global shares struggled to push higher

on Wednesday, as modest gains in Europe and the U.S. did little

to soothe investors spooked by a punishing selloff in Asia,

where unease over AI valuations has frayed nerves.

With sentiment towards AI-linked chipmakers turning sharply

negative amid mounting fears over competition from China,

investors now await earnings from tech heavyweights Microsoft ( MSFT )

and Meta, which will need to clear a high bar

when they report later in the day.

Expectations have become so lofty that even a sixfold jump

in SK Hynix's ( SKHY ) quarterly profit fell short, leading

to a 9.61% drop in shares.

"The selloff in chip stocks looks overdone, but volatility

should be expected whenever the market finds reasons to question

the durability of the AI cycle," said Jake Seltz, portfolio

manager for the Empiric LT Equity team at Allspring Global

Investments.

"Expectations were so high that good numbers have not always

been enough."

South Korea's KOSPI, which has become emblematic of

the sharp swings in AI sentiment, fell nearly 6% a day after

sinking more than 10% to a three-month low.

Finance minister Koo Yun-cheol apologised on Wednesday that

single-stock leveraged exchange-traded funds were introduced

without careful consideration. The approval of these ETFs has

been criticised as having led ⁠to ​increased volatility in ​the

South Korean market.

The pan-European STOXX 600 benchmark rose 0.13%,

helped by gains in oil and gas shares. On Wall Street, futures

tracking the tech-heavy Nasdaq 100 were up 0.09%.

The MSCI All Country World Price index

dipped 0.11%, hovering close to its lowest level in a month.

A rate decision from the Federal Reserve is also coming up

later in the day.

Traders largely expect the U.S. central bank to hold rates

steady, but are pricing in at least one hike by the end of the

year. Several of the central bank's policymakers have openly

expressed their concern about inflation.

While the Fed meeting is widely expected to be a

"non-event," higher funding costs pose a key risk to equities

this year, with many tech giants relying increasingly on public

markets to fund their expansion, said David Waddell, chief

investment strategist at Coastal Bridge Advisors.

OIL PRICES CLOUD INFLATION OUTLOOK

In addition to the twin tests of earnings and central bank

policy, investors are also contending with uncertainty in the

Middle East, where diplomatic efforts to end the war have

proceeded in fits and starts, and durable peace remains elusive.

"That sort of rapid flipping and flopping has made the

signal and the noise a lot harder to separate," said Edward

Acton, rates strategist at GMO.

Fresh strikes in the region lifted Brent crude futures

up 3.29% to $86.86 a barrel, putting the contract on

track to snap a three-day losing streak.

"Oil volatility, not just the level, can be inflationary if

some prices go up with oil but are reluctant to come back down,"

BofA Securities strategists wrote.

The prospect of oil-driven inflation has kept pressure on

Treasuries. The yield on the benchmark 10-year U.S. Treasury

note rose 1.04 basis points to 4.6103%, on course to

end a three-day decline.

The 30-year U.S. Treasury yield was at 5.0948%.

It has stayed above 5% for 17 consecutive sessions.

(Reporting by Niket Nishant in Bengaluru and Ankur Banerjee in

Singapore; Editing by Shri Navaratnam, Kate Mayberry, Amanda

Cooper and Mrigank Dhaniwala)