Volkswacht Bodensee - Stocks slip as Canada raises interest rates

Meanwhile, data showed weakness in China's economy and US exports fell, raising concerns about the strength of the global economy.

A World Bank warning on the global economic outlook released Tuesday also gave some food for thought as it lowered its growth expectations for next year, though the Organisation for Economic Co-operation and Development slightly raised its growth outlook for the world economy to 2.7 percent.

Canada's central bank on Wednesday increased its benchmark lending rate by 25 basis points to 4.75 percent, as the economy rose unexpectedly and inflation remained stubbornly high, following Australia's lifting of its interest rate to an 11-year high on Tuesday.

"Risk appetite had looked wobbly earlier today following poor Chinese trade data and disappointing German industrial output numbers, but a second hawkish central bank in as many days has resulted in stocks turning lower once again," said Chris Beauchamp, chief market analyst at online trading platform IG.

European stocks gave up their gains, as did the S&P 500 and Nasdaq on Wall Street. The Dow held onto to marginal gains.

The Fed meets next week, with investors having hoped policymakers might not lift borrowing costs for an 11th meeting in a row in light of recent data indicating that more than a year of tightening was beginning to kick in.

A mixed jobs report last week, which showed a pickup in hiring but slower wage growth, suggested the US economy remained healthy and would give the central bank room to skip a hike this month, even as inflation remains sticky.

Traders were also keeping tabs on China, with reports saying authorities have asked the country's biggest banks to lower their deposit rates to boost the economy as it struggles to recover from years of zero-Covid lockdowns.

Analysts said such a move could indicate China's central bank was considering an interest rate cut as soon as this month.

The need for fresh help was highlighted Wednesday by data showing that Chinese exports tumbled more than seven percent in May, far more than expected and the first drop since February.

The reading was "yet another disappointing data which will raise growth concerns and intensify expectations of more policy support", said Khoon Goh at Australia and New Zealand Banking Group.

Michael Hewson at CMC Markets said "investor caution is understandable given that today's numbers out of China are the latest example of global economic data that has pointed to a weak demand outlook, at a time when interest rates appear to have further to rise".

The trade figures follow data showing shrinking factory activity and underscored the uphill task officials have in kickstarting the economy.

Along with weak Chinese data, markets reacted also to news of subdued industrial production in Europe's biggest economy, Germany.

US trade data for April also caused concerns about the global economic outlook as exports fell by 3.6 percent from March, a drop of $9.2 billion.

In foreign exchange, the Turkish lira sank to an all-time low against the dollar, with the currency continuing to struggle after the re-election of President Recep Tayyip Erdogan at the end of May.

The greenback, which hit a peak at 23.17 lira, was down against the euro and pound.

- Key figures around 1530 GMT -

New York - Dow: UP less than 0.1 percent at 33,603.48 points

London - FTSE 100: DOWN less than 0.1 percent at 7,624.34 (close)

Frankfurt - DAX: DOWN 0.2 percent at 15,960.56 (close)

Paris - CAC 40: DOWN less than 0.1 percent at 7,202.79 (close)

EURO STOXX 50: DOWN less than 0.1 percent at 4,291.91 (close)

Tokyo - Nikkei 225: DOWN 1.8 percent at 31,913.74 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 19,252.00 (close)

Shanghai - Composite: UP 0.1 percent at 3,197.76 (close)

Euro/dollar: UP at $1.0705 from $1.0696 on Tuesday

Pound/dollar: UP at $1.2457 from $1.2427

Dollar/yen: UP at 139.86 yen from 139.65 yen

Euro/pound: DOWN at 85.94 pence from 86.07 pence

Brent North Sea crude: UP 1.2 percent at $77.22 per barrel

West Texas Intermediate: UP 1.5 percent at $72.80 per barrel

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O.Bulka--BTB