US shares closed ahead after a day of see-sawing as jitters continued across global stock markets.
Even though it looks worrying, price volatility helps traders make money
The Dow Jones and Nasdaq both opened lower, reflecting declines in leading European markets, and fluctuated all day before settling in the black.
Europe's main share indexes all lost value with the FTSE 100, the Cac 40 and the Dax down more than 1.2% by close.
Worries about inflation and interest rate rises in the US have overshadowed corporate profits growth.
Analysts expect volatile trading to continue.
Weighing on the markets is the fear that higher interest rates needed to rein in inflation could kill off the global economic recovery in the process.
Higher borrowing costs put a brake on consumer spending and corporate investment, squeezing profits and jeopardising growth.
The cautious mood persisted in the US, with the Dow Jones and Nasdaq managing to end ahead by 0.17% and 0.48% respectively after an inconclusive day.
The confused directions of the markets were reflected in two economic reports - one showing sales of new housing had risen, the other that demand for durables such as aircraft and computers was down.
"People are still on very skittish ground here," said Miller Tabak & Co analyst Peter Boockvar.
"Every single rally has failed. The market seems to be in a corrective phase."
In Europe, the UK's main FTSE 100 share index closed down 91.6 points, while Germany's Dax and France's Cac ended the day down 91.26 points and 61.51 points respectively in late afternoon trading.
In India, another volatile day of trading saw the BSE Sensex index lose much of the 341 points gain made on Tuesday, closing down 2.3% or 249 at 10,573.
Analysts say that even though there are concerns that price growth may accelerate and push up interest rates, the sell-off means share prices are coming back to levels that could make them attractive to investors.
As a result, they predict that the declines may be short-lived.
The strength and speed of the sell-off caught many people by surprise
Market watchers said they expected a period of consolidation, rather than a rapid recovery, with a lot depending on the quality of earnings and economic reports released in coming weeks.
"We are sceptical if there is anything fundamental about these falls," said Tristan Hanson of Cazenove. "It is more panic."
Japan's Nikkei 225 index rebounded strongly on Wednesday as a weaker yen lifted optimism that exporters, including camera firm Canon and carmakers Toyota and Honda, would benefit and foreign sales increase.
One of the main areas of concern has been the rapid rise of commodity prices, amid fears that a market bubble is about to burst.
On Wednesday, investor selling pulled gold prices down by 6%.
Meanwhile, crude oil prices, one of the main factors behind the inflation fears, dipped as supply concerns eased.
In London, a barrel of Brent crude fell back $1.88 cents to $69.22 and a barrel of light crude slid 2.7% or $1.90 to $69.86 in New York.
The US dollar had rebounded against both the yen and euro in Asian trading, and climbed against most major currencies after the report on housing sales increased speculation that interest rates may be hiked next month.