By Elizabeth Howcroft

LONDON (Reuters) -European stocks fell on Wednesday and Wall Street futures were in the red as worries about weak global growth in the face of central bank tightening weighed on markets.

The OECD slashed its growth outlook and raised its inflation estimates – although it said there was a limited risk of “stagflation”.

On Tuesday, the World Bank slashed its global growth forecast by nearly a third to 2.9% for 2022, warning of a period of “feeble growth and elevated inflation”, and U.S. Treasury Secretary Janet Yellen told senators that she expected inflation to remain high.

Asian stocks strengthened overnight, with Chinese stocks seeing some relief from easing COVID-19 restrictions, but sentiment was volatile and European indexes fell soon after opening.

At 1113 GMT, the MSCI world equity index, which tracks shares in 50 countries, was up 0.1%.

But Europe’s STOXX 600 was down 0.6% on the day, holding close to a one-week low. It was weighed down by banks after Credit Suisse warned it was likely to see a group-wide loss in the second quarter.

France’s CAC 40 was down 0.7%, while Germany’s DAX was down 0.4%.

The gloom looked set to continue into Wall Street, with Nasdaq futures and S&P 500 e-minis both down 0.1% and 0.3% respectively .

Analysts said markets were likely to struggle for direction, with focus on the European Central Bank’s meeting on Thursday and U.S. CPI data on Friday.

Grace Peters, EMEA head of investment strategy at JPMorgan Private Bank, said that there was a renewed focus on inflation as oil prices remained above $120 and supply chain problems persisted.

“Markets priced rate hikes so aggressively, the consumer is getting hammered,” she said.

“Financial conditions are already tight and we are at a point where they could tip over and cause a recession.”

Investors raised their bets on ECB rate hikes, and as European markets opened, money markets were pricing in 75 basis points of rate hikes by September.

With the bank largely expected to start hikes in July and move in 25 basis-point increments, the pricing implies traders now expect its hikes to include a rare 50 basis-point move at a single meeting by September.

European government bond yields rose, with the benchmark German 10-year yield up 7 basis points at 1.352%.

The 10-year U.S. Treasury yield held just above 3%, rising again after it fell on Tuesday when Target Corp said it would cut prices, boosting bets that the worst of inflation may be past.

“The tail is wagging the dog: rates are driving equities,” said Guillaume Paillat, multi-asset portfolio manager at Aviva Investors.

“The fundamentals are still unclear in terms of how long is it going to take for inflation to come down, but for the time being there’ll probably be room for consolidation.”

The dollar index slipped to 102.35 . The Japanese yen hit fresh 20-year lows versus the dollar and a seven-year low against the euro due to expectations that the European Central Bank tightening policy will leave the Bank of Japan as an outlier with its ultra easy monetary policy.

Japan’s economy shrank slightly less than initially reported in the first quarter, as private consumption remained resilient and companies rebuilt inventories.

German industrial production recovered but rose by less than expected in April.

The euro was up around 0.3% on the day at $1.0734.

In the UK, the pace of house price increases slowed for a third month in a row in May, and mortgage lender Halifax said that a further cooling of demand is likely.

In cryptocurrencies, bitcoin was trading around $30,410.

(Reporting by Elizabeth Howcroft, additional reporting by Sujata Rao, Editing by William Maclean and Chizu Nomiyama)