With the financial turmoil of recent weeks subsiding, traders are refocusing on the battle against inflation, though expectations for how high borrowing costs will go have lowered.

The Federal Reserve had been tipped to push rates well above 5 percent by the end of the year, but with credit seen narrowing in light of the latest upheaval, forecasts are for them to finish just above 4 percent.

That has helped push up equities, which had been under pressure through February and March.

And even comments from top Fed officials warning that the bank would need to keep its focus on fighting inflation -- despite concerns about the finance sector -- hurt sentiment on trading floors.

Boston Fed boss Susan Collins said the banking system was on safe ground, telling a business conference: "Inflation remains too high, and recent indicators reinforce my view that there is more work to do to bring inflation down to the 2 percent target associated with price stability."

Meanwhile, Richmond president Thomas Barkin warned stepping back from the battle against soaring prices would be foolhardy.

"If you back off on inflation too soon, inflation comes back stronger, requiring the Fed to do even more, with even more damage," he said.

"With inflation high, broad-based and persistent, I didn't want to take that risk."

Still, all three main indexes on Wall Street pushed well up Thursday, as did European equities following the release of data indicating inflation on the continent was slowing.

In a sign of the improved mood on trading floors, the so-called VIX "fear" index dropped below 20 to its lowest point since the start of March.

In Asia, Hong Kong led the way, rising 1.7 percent thanks to a rally in tech firms after it emerged that the e-commerce giant Alibaba's logistics arm was preparing for a listing in the city.

News of the IPO by Cainiao Network Technology comes after Alibaba said it intended to split into six units and go public.

Alibaba was up more than 4 percent.

And rival JD.com jumped more than 7 percent on news that two of its subsidiaries had filed for IPOs in Hong Kong.

Shanghai, Tokyo, Sydney, Seoul, Singapore and Taipei were also in positive territory, though there was selling in Manila, Jakarta and Wellington.

Investors are now awaiting the release of US and eurozone inflation data later in the day, which should provide a better insight into how much impact rate hikes are having in taming prices.