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)