World stocks edged higher on Friday, but gains were capped by dwindling stimulus in the United States and concerns about the damage to the global economy from further COVID-19 infections.

Hopes of a stimulus-led recovery receded after US Treasury Secretary Steven Mnuchin said key COVID-19 pandemic lending programmes at the Federal Reserve to support businesses and local governments would expire by the end of 2020.

Meanwhile, flare-ups in coronavirus cases dampened sentiment, with California announcing fresh curfews to try to fight surging infections, while Japan faces a third wave of the virus, and parts of Europe are already under recently renewed restrictions.

The World Trade Organization said that while global trade in goods had rebounded in the third quarter from lockdowns, there would be a slowdown at the end of 2020.

Europe’s STOXX 600 edged 0.4% higher, while the global stocks index was also 0.2% firmer and on course for its third weekly gain in a row.

S&P500 futures were flat, while Dow futures fell 0.1%, cancelling out a firmer lead from a strong Wall Street session overnight.

The dollar edged up before reversing later and the 10-year Treasury yield slipped to the lowest in 10 days at 0.818%, before stabilizing in later trading.

Benchmark German 10-year Bund yields fell to a nine-day low.

In Asia, Japan’s Nikkei stumbled 0.4%, weighed down by a rise in new domestic coronavirus infections to record highs. Chinese shares were 0.3% stronger.

In a letter to US Federal Reserve Chair Jerome Powell, Mnuchin said $455 billion allocated to Treasury under the CARES Act should be instead available for Congress to reallocate.

Although not used extensively, Fed officials felt the programs reassured financial markets and investors that credit would remain available to help businesses, local agencies and even non-profits through the pandemic.

Mnuchin’s decision added to market anxiety about broader economic growth as data shows the early fast recovery from a historic plunge in the US economy is fading, with more than 10 million who had jobs in January still out of work.

“The fact the market is able to resist to this extent means there is some sun ahead, driven by the fact that in the medium term economic activity will accelerate and there is positive news on the vaccine,” François Savary, chief investment officer at Swiss wealth manager Prime Partners, said.

Investor sentiment was also hit by data that showed COVID-19 hospitalizations across the United States jumped by nearly 50% in the last two weeks, threatening the recovery of the world’s largest economy as cities and states imposed lockdowns.

All three major US stock indexes, however, got a boost overnight after Senate Democratic Minority Leader Chuck Schumer said Republican Majority Leader Mitch McConnell had agreed to revive talks to craft a new fiscal relief package.

In Europe, investors clung to signs of progress on coronavirus vaccines.

The European Union could pay more than $10 billion to secure hundreds of millions of doses of the vaccine candidates being developed by Pfizer-BioNTech and CureVac, an EU official involved in the talks told Reuters.

In currencies, the dollar index was at 92.20, broadly flat on the day after it slipped overnight then picked up again as European markets opened.

The euro was flat against the dollar, at $1.18705, on track for a small weekly gain, while the Australian dollar is having its best month versus the US dollar since April, in terms of percentage change.

The New Zealand dollar rose to a new two-year high against the US dollar.

In commodities, oil prices steadied after losses the previous day, when concerns about coronavirus lockdowns affecting fuel demand weighed on the market.

The US West Texas Intermediate (WTI) January crude contract added 0.5% to $42.09 a barrel. Brent crude was up 0.7% at $44.51.

 Gold was headed for a second weekly decline on Friday on growing optimism about COVID-19 vaccines, with the US Treasury’s call to end emergency loan programmes also limiting bullion’s safe-haven appeal. Spot gold eased 0.1% at $1,866.38 per ounce by 1227 GMT and was down 1.2% for the week. US gold futures were up 0.1% at $1,864. US Treasury Secretary Steven Mnuchin said key lending programs at the Federal Reserve would expire on Dec. 31, casting doubts over the future of fiscal support.

While the news weighed on risk sentiment, it did not stop world stocks from gaining on the back of brightening prospects for a faster economic recovery thanks to positive developments on the vaccine front.

“The underlying momentum behind gold has dissipated,” said independent analyst Ross Norman, adding gold was pressured by year-end profit-taking and investors liquidating long positions. Investors pulled $4 billion from gold, the biggest outflow ever, amid a rush for riskier assets last week, BofA said on Friday.

Also, holdings in the SPDR Gold Trust exchange-traded fund have seen net outflows of about 40 tonnes so far in November. “But it’s important to remember that the gold bull run was never predicated on COVID-19,” and factors including a weak economy and the likelihood of interest rates remaining subdued for an extended period will continue to support it, Norman added.