LONDON/HONG KONG - Global stocks inched higher on Wednesday as investors found a footing after a sharp sell-off the previous day, while U.S. Treasury yields dipped after hitting their highest level since 2007.

Stocks and bonds have dropped in recent weeks as investors come to terms with the idea that central banks will hold interest rates "higher for longer" than previously expected, as officials try to squeeze inflation out of economies.

The Europe-wide STOXX 600 index was up 0.2% on Wednesday, after falling 0.6% in the previous session in its fourth straight daily drop.

MSCI's index of global stocks was little changed after falling 1.2% the previous day. The index has fallen 4.5% since the start of September.

Germany's Dax index was up 0.05% while Britain's FTSE 100 was flat. In Asia overnight, Japan's Nikkei 225 index rose 0.18%.

At the root of the recent equity sell-off, said Jan von Gerich, chief analyst at Nordea, has been a sharp rise in bond yields as traders have cut their bets that central banks will lower interest rates any time soon.

"The latest catalyst has been the increase in bond yields, so if that stabilises then maybe the equity market stabilises as well," he said.

"The big picture outlook is that we're probably close to the peak (in bond yields) but the near-term momentum is still upwards."

On Wednesday, the yield on the 10-year U.S. Treasury note was down 5 basis points to 4.507%, after touching its highest level since October 2007 on Tuesday at 4.566%. A bond's yield rises as its price falls, and vice versa.

Also on investors' minds is a looming U.S. government shutdown; further signs of an economic slump in China; and a recent rise in oil prices.

U.S. equity futures picked up as bond yields fell, with contracts for the benchmark S&P 500 stock index 0.43% higher. Dow Jones futures were 0.35% higher while Nasdaq futures were up 0.46%.

The Dow posted its biggest one-day percentage drop since March on Tuesday, while all three major averages ended at their lowest closing levels in well over three months.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was 0.12% higher. The index is down 3.7% so far this month.

Chinese corporate health was a focal point. Profits at China's industrial firms fell 11.7% in the first eight months of the year, albeit a smaller decline than the 15.5% drop for the first seven months.

"The stabilising industrial profits are simply not significant enough to override concerns about risks, especially in real estate," said Gary Ng, Asia Pacific senior economist at Natixis.

As stress spreads in the Chinese property sector, Bloomberg reported that the chairman of beleaguered Chinese property group Evergrande has been placed under police surveillance.

The dollar index, which tracks the greenback against a basket of currencies, was roughly flat at 106.2. It climbed to 106.32 earlier in the session, its highest since Nov. 30.

U.S. crude oil was 1.14% higher to $91.42 a barrel. Brent crude rose 0.85% to $94.76 per barrel.

The U.S. Senate on Tuesday took a step forward on a bipartisan bill meant to stop the government from shutting down in just five days, but the House remains hamstrung by divisions between Republican members.

Meanwhile, investors were also on the lookout for government intervention in the Japanese yen after it fell past the 149 per dollar mark on Tuesday for the first time in just under a year.

(Reporting by Harry Robertson in London and Julie Zhu in Hong Kong; Editing by Jamie Freed, Edwina Gibbs and Anil D'Silva)