LONDON: The dollar dipped Wednesday before a key Federal Reserve policy announcement, while European stock markets mostly played catch-up after May Day closures.
Frankfurt and Paris markets reopened as new data showed growth in the eurozone had slowed in the first quarter of the year, adding to fears that the recovery in Europe was losing steam.
As trading floors reopened after the Labour Day break, attention was on the Fed's policy decision later Wednesday.
While the central bank is not expected to lift US interest rates at its current meeting, traders will study the Fed's statement for clues on the pace of hikes expected this year.
A broadly positive outlook for the US economy, along with easing geopolitical and trade worries, had helped to lift the dollar earlier in the week.
Wall Street dipped at the opening, after New York's three main indices ended mixed Tuesday, with analysts warning that the strong US earnings season could be a high mark for the year.
Apple shares were sharply up after the company reported a hefty jump in second-quarter earnings and unveiled a $100-billion share buyback plan, while boss Tim Cook was optimistic about the outlook.
- Iran deal 'flashpoint' -
Traders are also keeping tabs on trade developments as a high-level US delegation heads to China this week for talks.
The meetings come after US President Donald Trump on Monday decided to extend exemptions for the European Union, Canada and Mexico from steel and aluminium tariffs announced in March.
Attention is on also Trump's May 12 deadline for deciding on whether to scrap a nuclear deal with Iran.
"The Iran sanctions deal issue has not gone away because what the president does about the deal is still a potential flashpoint," said Greg McKenna, an analyst at AxiTrader.
"My sense is he'll renegotiate or seek to. And I'm not sure that's enough to drive (oil) prices up and through the recent range highs."
Oil futures were lower in mid-afternoon European trading.
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