The euro recovered, lifted by demand from Asian central banks and pressure on the commodity-sensitive Australian dollar.

The rate hike also fueled concerns over Chinese demand for commodities, sending copper and tin prices lower. Spot gold prices, however, rose $16.05, or 1.19 percent, to $1364.80.

China's central bank raised its benchmark one-year deposit rate by 25 basis points to 3 percent on Tuesday.

"Stocks have fallen back on the China news, markets are overheating and face inflationary pressures," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said.

"They are vulnerable to anything that reduces liquidity."

The MSCI world equity index remained little changed at its highest level since August 2008, up 0.2 percent. The Thomson Reuters global stock index was flat.

US stocks coasted, lingering near 2-1/2 year highs as investors focused on upcoming corporate earnings and mergers.

At open, the Dow Jones industrial average rose 13.32 points, or 0.11 percent, to 12,174.95. The Standard & Poor's 500 Index gained 0.32 points, or 0.02 percent, at 1,319.37. The Nasdaq Composite Index added 1.53 points, or 0.05 percent, to 2,785.52.

Similarly, Europe's FTSEurofirst 300 index hovered near 29-month highs hit on Monday, easing 0.4 percent.

Emerging stocks continued to falter, down 0.2 percent as Brazil reported the biggest surge of consumer prices in nearly six years in January.

Hurting the most from China's move was US crude oil, which fell 0.6 percent to $86.96 a barrel as investors worried about oil demand in the world's largest energy consumer.

The dollar fell against the basket of major trading-partner currencies by 0.23 percent, while the euro gained 0.43 percent to $1.3645.

Inflationary concerns also pressured US Treasury debt prices. The benchmark 10-year US Treasury note was down 7/32, with the yield at 3.67 percent, while the 2-year note was down 2/32, with the yield at 0.79 percent. The 30-year bond was down 6/32, with the yield at 4.71 percent.

Chinese markets are closed for the Lunar New Year holidays.