TOKYO (BLOOMBERG, REUTERS) - The global stock rally powered by investor optimism for a speedy economic recovery from the pandemic paused on Thursday (June 4) on profit-taking and concerns over China-US tensions.

Equities in Japan erased gains of as much as 1 per cent, with the Nikkei index up 0.1 per cent at 11:35am in Tokyo. South Korea, Hong Kong and Australia also pared advances, while Chinese stocks fluctuated.

Hong Kong's Hang Seng was down 0.3 per cent while the Shanghai Composite eased 0.2 per cent. South Korea's Kospi index was down 0.1 per cent.

Singapore's Straits Times Index was down 0.2 per cent at 11:12am local time, reverersing earlier gains.

Australia's S&P/ASX 200 Index added 0.5 per cent after the country's prime minister unveiled a fourth stimulus package to repair the economy.%

US equity futures slipped after the Nasdaq 100 earlier briefly surpassed its February closing record and banks led the S&P 500 Index to a three-month high. Treasuries retained declines as investors turned away from havens after US private payrolls showed fewer job losses than forecast in May.

The reopening of global economies has turned into a tailwind for stocks, along with unprecedented levels of stimulus across the world. Wednesday's advance was driven by financials, autos and durable goods manufacturers, indicating the rally is broadening out. Big tech shares lagged.

Governments around the world have gradually started to lift tough lockdown measures imposed to contain the coronavirus which has infected nearly 6.4 million people and killed over 379,000.

"People are seeing the damage to the economy abate and investors now believe there is light at the end of tunnel," Susan Schmidt, a portfolio manager at Aviva Investors Americas, said on Bloomberg TV. "We will continue to see support for the stock market."

However, tensions continue to simmer with the US barring Chinese airlines in retaliation for Beijing ignoring the requests of American carriers to resume flights to China that had been suspended for the pandemic.

Next up comes the European Central Bank, which is expected to boost its rescue programme on Thursday. Chancellor Angela Merkel's coalition earlier agreed on a sweeping 130 billion-euro (S$204 billion) stimulus package designed to spur short-term consumer spending and get businesses investing again.

Markets await also Friday's US Labor Department May jobs report, which is expected to show the US unemployment rate soaring to a post-World War Two high of nearly 20 per cent from 14.7 per cent in April.

On Wednesday, a report showed US private payrolls fell less than expected in May, suggesting layoffs were abating as businesses reopen.

US crude dipped 1.85 per cent to US$36.60 a barrel. Brent crude fell 1.18 per cent to US$39.32 per barrel.

Spot gold rose 0.4 per cent to US$1,704.31 an ounce early on Thursday after losing 1.6 per cent on Wednesday.