LONDON: Stock markets across the world fell Wednesday as traders awaited Federal Reserve policy minutes for clues on the outlook for US interest rates.
The minutes from the Fed's April meeting will be scoured for indications that a raise in US interest rates could be back on the table at the June meeting as the markets begin to take more seriously the possibility of more than one rate hike this year.
Asian stock markets mostly fell after a two-day rally, taking the baton from Wall Street which had fallen overnight as strong US economic data fuelled talk of a rate rise as soon as next month.
Wall Street reopened modestly lower on Wednesday, with the Dow down 0.4 percent after five minutes of trading, as traders remained focused on the Fed minutes.
In Europe, London's benchmark FTSE 100 index was down 0.7 percent compared with Tuesday's close in afternoon trading.
In the eurozone, Frankfurt's DAX 30 shed 0.5 percent and the Paris CAC 40 dropped 0.4 percent in value.
Traders in Europe shrugged off economic data in-line with market expectations and that showed Britain's unemployment rate steady at 5.1 percent and an easing to eurozone inflation.
"European markets slipped... as the rising threat of a US rate hike in June hit confidence, whilst the price of oil gave up yesterday's gains," said Jasper Lawler, market analyst at traders CMC Markets.
"The suggestion there could be two-three rate rises this year from Fed officials have markets worried."
In Asia, data revealed that the world's number three economy Japan expanded 0.4 percent in the first three months of the year, boosted by a pick-up in consumer spending.
The country's benchmark Nikkei stock index spent much of the day in positive territory. But the upbeat GDP figure was offset by fears it could allow the Bank of Japan to delay any fresh stimulus.
- Equities not attractive -
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Most Asian markets retreated after a sharp sell-off on Wall Street Tuesday, traders said. US investors ran for cover after news that industrial production, consumer prices and housing starts all rose in April -- fuelling speculation the Federal Reserve could raise borrowing costs as soon as next month.
"It's been some time coming but it seems the markets are finally waking up to the idea that the Fed could raise interest rates before the end of the year, even more than once," said Craig Erlam, senior market analyst at Oanda trading group.
Wall Street sentiment was also hobbled Wednesday by Goldman Sachs downgrading stocks to neutral for the next 12 months on valuation and growth worries.
"Until we see sustained earnings growth, equities do not look attractive, especially on a risk-adjusted basis," Goldman said in the note.
In foreign exchange activity, the euro declined against the dollar.
- Key figures around 1330 GMT -
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London - FTSE 100: DOWN 0.7 percent at 6,121.87 points
Frankfurt - DAX 30: DOWN 0.5 percent at 9,840.51
Paris - CAC 40: DOWN 0.4 percent at 4,280.20
EURO STOXX 50: DOWN 0.4 percent at 2,925.37
New York - Dow: DOWN 0.4 percent at 17,452.39
New York - S&P 500: DOWN 0.4 percent at 2,040.07
New York - Nasdaq: DOWN 0.2 percent at 4,708.33
Tokyo: Nikkei 225: DOWN 0.1 percent at 16,644.69 (close)
Shanghai - Composite: DOWN 1.3 percent at 2,807.51 (close)
Hong Kong - Hang Seng: DOWN 1.5 percent at 19,826.41 (close)
Euro/dollar: DOWN at $1.1274 from from $1.1313 on Tuesday
Dollar/yen: UP at 109.51 yen from 109.13 yen
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