LONDON: Eurozone stock markets and the euro slid Wednesday as traders tracked regional fallout from surging Covid cases and awaited confirmation that Germany had formed a new government.
Investors were also awaiting minutes of the last Federal Reserve policy meeting.
Recent market movements suggest that the Fed could taper its bond-buying programme quicker than first flagged and hike US interest rates next year as the economy recovers and inflation surges.
Turkey's lira meanwhile remained wedged close to all-time lows against the dollar after the country's President Recep Tayyip Erdogan dug in on his decision to pressure the central bank to cut interest rates even though inflation is soaring.
Oil prices retreated despite the United States and other countries releasing less stockpiled crude than expected.
Oil mixed, investors sceptical about effectiveness of joint reserve release
A recent surge in oil prices has added to concerns that inflation -- already at multi-year highs -- will continue to rise, putting further pressure on banks to scale back the easy money policies put in place at the start of the pandemic and crucial to an 18-month rally for stock markets.
The New Zealand central bank on Wednesday lifted its rates for a second successive month.
"Rising Covid-19 cases in Europe and fears of an accelerated tapering programme in the US are currently unsettling investors," noted Richard Hunter, head of markets at Interactive Investor.
Several countries in Europe have introduced strict containment measures to fight a resurgence of Covid, with Austria returning to a partial lockdown and some fearing Germany, the continent's biggest economy, will follow suit.
A centre-left-led alliance of parties was on Wednesday poised to announce a deal to form Germany's next government, putting the Social Democrats (SPD) in charge for the first time in 16 years.
Christian Lindner, leader of the business-friendly Free Democrats, was expected to run the powerful finance ministry.
Two months after the SPD beat Angela Merkel's conservative CDU-CSU coalition in a general election, its negotiators put the finishing touches on the deal with the Greens and Free Democrats that will install Finance Minister Olaf Scholz as chancellor.
Meanwhile, the European Union health agency called Wednesday on member states to "urgently" introduce anti-Covid measures to reduce the potentially "very high" burden the disease will have in December and January.
The director of the European Centre for Disease Prevention and Control, Andrea Ammon, recommended Covid booster shots for all adults over the age of 18, "with a priority for people above 40 years old".
The agency also urged countries to increase their overall vaccination rates, especially those with low uptake.
Key figures around 1200 GMT
Frankfurt - DAX: DOWN 0.6 percent at 15,845.51 points
Paris - CAC 40: DOWN 0.2 percent at 7,034.27
EURO STOXX 50: DOWN 0.3 percent at 4,270.67
London - FTSE 100: UP 0.1 percent at 7,272.29
Tokyo - Nikkei 225: DOWN 1.6 percent at 29,302.66 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 24,685.50 (close)
Shanghai - Composite: UP 0.1 percent at 3,592.70 (close)
New York - Dow: UP 0.5 percent at 35,813.80 (close)
Euro/dollar: DOWN at $1.1217 from $1.1251 at 2230 GMT
Euro/pound: DOWN at 83.88 pence from 84.03 pence
Pound/dollar: DOWN at $1.3372 from $1.3381
Dollar/yen: DOWN at 114.99 yen from 115.11 yen
Brent North Sea crude: DOWN 0.3 percent at $81.07 per barrel
West Texas Intermediate: DOWN 0.1 percent at $78.42 per barrel
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