Volkswacht Bodensee - Europe stocks mainly drop before expected Fed hike

London equities slipped on the eve of another expected large rate increase from the Bank of England.

In the eurozone, Frankfurt fell but Paris rose following weak eurozone manufacturing survey data and a dip in German exports.

"All eyes will be on central banks on both sides of the Atlantic as both the US Federal Reserve and BoE get ready to deliver their rate decisions over the next 24 hours or so," said AJ Bell investment director Russ Mould.

"While we have a good idea of the quantum of increase both parties will deliver, it will be all about the mood music."

Global central banks have this year ramped up borrowing costs in an attempt to curb inflation, which has rocketed on sky-high energy costs arising from Russia's war on Ukraine.

Economists fear that rising rates will spark a global economic downturn because they ramp up loan repayments for individuals and businesses, thereby denting consumer spending and investment.

- US rate clues -

Wednesday's Fed decision is hotly anticipated by traders hoping for a hint from officials that they are ready to temper their speed of monetary tightening.

"Investors are waiting for clues from the Federal Reserve about the path of rate rises, and in the meantime a slightly more wary mood has settled on the markets," added Hargreaves Lansdown analyst Susannah Streeter.

"The Fed is expected to bring in another super-size rate hike of 0.75 percentage points."

In Asia, stocks traded mixed Wednesday after losses on Wall Street, as forecast-beating US data jolted hopes the Fed could soon tone down its hawkish pace of rate hikes.

Hong Kong led gainers -- extending the previous day's surge -- as traders remain hopeful China could begin rolling back its economically painful zero-Covid policy, the day after an unverified statement suggesting a shift was taking place.

Suggestions that the Fed could take its foot off the pedal as the world's top economy shows signs of slowing have helped fuel a rally across risk assets for more than a week.

But some of the wind was taken out of their sails Tuesday after data showed a rise in job openings while other numbers released indicated the manufacturing sector did not perform as badly as expected last month.

The readings suggest the US economy continues to hold up despite recent signs of weakness in the face of decades-high inflation.

Elsewhere, oil prices rose Wednesday after a report said US stockpiles saw a huge drop last week, suggesting demand remains intact as worries about supplies continue to swirl.

- Key figures around 0930 GMT -

London - FTSE 100: DOWN 0.1 percent at 7,182.65 points

Frankfurt - DAX: DOWN 0.2 percent at 13,312.85

Paris - CAC 40: UP 0.1 percent at 6,332.78

EURO STOXX 50: FLAT at 3,651.24

Tokyo - Nikkei 225: DOWN 0.1 percent at 27,663.39 (close)

Hong Kong - Hang Seng Index: UP 2.4 percent at 15,827.17 (close)

Shanghai - Composite: UP 1.2 percent at 3,003.37 (close)

New York - Dow: DOWN 0.24 percent at 32,653.20 (close)

Euro/dollar: UP at $0.9890 from $0.9883 on Tuesday

Pound/dollar: UP at $1.1496 from $1.1486

Dollar/yen: DOWN at 147.10 yen from 148.23 yen

Euro/pound: UP at 86.05 pence from 85.96 pence

Brent North Sea crude: UP 0.5 percent at $95.11 per barrel

West Texas Intermediate: UP 0.5 percent at $88.84 per barrel

C.Kovalenko--BTB