European shares mostly down after rally in Asia, as focus remains on rates

European shares mostly declined early Friday, but Asian benchmarks rose after U.S. stocks climbed to records.

France's CAC 40 edged up less than 0.1% in early trading to 8,019.83, while Germany's DAX dipped 0.1% to 17,823.36. Britain's FTSE 100 shed nearly 0.2% to 7,680.05. U.S. shares were set to trade mixed in a narrow range, with Dow futures down less than 0.1% at 38,813.00. S&P 500 futures added less than 0.1% to 5,166.25.

In Asia, Japan's benchmark Nikkei 225 added 0.2% to finish at 39,688.94. Sydney's S&P/ASX 200 jumped 1.1% to 7,847.00. South Korea's Kospi surged 1.2% to 2,680.35. Hong Kong's Hang Seng rose 0.8% to 16,353.39, while the Shanghai Composite recouped early losses to be 0.6% higher at 3,046.02.

Although economic data from the region, such as China, remained relatively positive, investors stayed cautious. Higher interest rates could be in store, for instance, in Japan, once the economy picks up.

"This was driven by reports of (Bank of Japan) officials being more confident of wage growth as labor cash earnings outperformed," said Tan Boon Heng at Mizuho Bank in Singapore.

U.S. Federal Reserve Chair Jerome Powell said in testimony on Capitol Hill that the central bank is "not far" from delivering the cuts to interest rates that Wall Street craves so much. He said again that the Fed is just waiting for additional data to confirm inflation is cooling.

It's a key point on Wall Street, where after shelving earlier hopes for cuts to begin in March, traders now see June as the likeliest starting point. The Fed's main interest rate is at its highest level since 2001.

After getting criticism for waiting too long before raising interest rates when inflation was accelerating, Powell faced questions from the Senate's banking committee about the possibility that it could be too late in cutting rates. That would cause undue pain because high rates slow the economy.

Across the Atlantic, traders were also trying to guess when the European Central Bank will begin cutting interest rates after its president said it's making progress on getting inflation under control.

A potentially impactful report arrives Friday morning, when the U.S. government will give its latest monthly update on the job market. The hope among traders is that the job market remains healthy but not so much that it deters the Federal Reserve from cutting interest rates.

In energy trading, benchmark U.S. crude rose 77 cents to $79.70 a barrel. Brent crude, the international standard, gained 64 cents to $83.60 a barrel.

In currency trading, the U.S. dollar inched up to 147.92 Japanese yen from 147.90 yen. The euro cost $1.0935, down from $1.0951.