The MSCI world equity index, a global benchmark that tracks shares in 50 countries, hovered near breakeven, down 0.03%, after earlier setting a new intraday high.
Stocks on Wall Street also seesawed near breakeven as investors repositioned portfolios into tech stocks after they shrugged off data on Thursday that showed year-on-year inflation spiked to 5.0% in May, a jump viewed as being transitory.
Inflation data has alarmed many investors, but for the moment the reaction is stocks are still preferable to bonds in an inflationary environment, said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
Investors are leaning into tech stocks because they don't use raw materials and productivity rate is higher than other sectors, he said.
"There is a concern that eventually you could get some migration out of stocks into bonds. But right now we seem to be at that pre-tipping point where bonds don't yield enough to scare people out of stocks," Meckler said.
The Dow Jones Industrial Average fell 0.17%, the S&P 500 slipped 0.01% and the Nasdaq Composite added 0.1%.
Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3%.
Yields on 10-year U.S. Treasury notes rose 0.6 basis points to 1.4653% after earlier declines that positioned the benchmark for its biggest weekly decline in a year.
Euro area bond yields followed Treasuries. Benchmark German 10-year bonds fell 3 basis points to -0.28% and were set for their best week of the year. Yields move inversely with prices.
Falling expectations that higher inflation could lead to early Fed tightening prompted a flattening of the U.S. yield curve, with the spread between the 10-year and 2-year yield at its narrowest since late February on Friday.
Yields will likely move higher again as economies reopen from coronavirus lockdowns.
"We still think consumers are going to help prices higher, when these economies reopen properly, that people can start travelling again, spending again," said Jeremy Gatto, investment manager at Unigestion. "We are going to get a further boost from the consumption side, and we therefore expect bond yields to move higher."
The euro and sterling dipped against the dollar as investors bet interest rates would stay lower for longer in Europe.
The dollar index rose 0.57%, with the euro down 0.61% to $1.2095. The Japanese yen weakened 0.40% versus the greenback at 109.76 per dollar.
Oil prices rose to multi-year highs, heading for a third straight week of gains on the improved outlook for worldwide demand as rising vaccination rates lead to a lifting of pandemic curbs.
Brent crude futures rose 32 cents to $72.84 a barrel. U.S. crude futures gained 60 cents to $70.89 a barrel.
(Reporting by Herbert Lash, additional reporting by Tom Wilson in London, Andrew Galbraith in Shanghai and Sujata Rao Editing by Shri Navaratnam, Kim Coghill, Elaine Hardcastle and Diane Craft) ((email@example.com; 1-646-223-6019; Reuters Messaging: firstname.lastname@example.org))