LONDONHONG KONG, July 4 Reuters Global stocks held steady on Tuesday, as investors balanced the inflationary force of rising oil prices with hopes that central banks would not overtighten monetary policy into a potential recession.

MSCI39;s broadest index of world stocks, which rose almost 6 last month as the U.S. Federal Reserve paused its cycle of aggressive rate hikes, was flat in light trading, with Wall Street closed for the July 4 holiday.

Europe39;s Stoxx 600 share index added 0.2.

Earlier in the session, Australia39;s central bank held interest rates steady at 4.1, saying it needed time to assess the economic impact of its rate hikes so far.

Complicating the outlook for inflation, oil prices rose on Tuesday as markets weighed supply cuts for August by top producers Saudi Arabia and Russia.

Brent crude futures climbed 0.9 to 75.35 a barrel, with West Texas Intermediate crude up 1 at 70.46.

Data on Monday from the Institute of Supply Management showed U.S. manufacturing activity slumped in June to levels last seen during the initial wave of the COVID19 pandemic in May 2020. Purchasing managers surveys showed a similar factory downturn in the euro zone.

At least the improved supplydemand imbalance seems to be having an effect on price pressures, Capital Economics global economist Ariane Curtis said.

Despite evidence that goods inflation was easing off, Curtis cautioned that central bankers might keep policy tight to battle servicesector inflation which has…