LONDON: Stock markets mostly dropped Thursday as profit-taking set in after recent strong gains, as traders awaited interest rate updates from the European Central Bank and the Bank of England.
While the BoE is expected to hike its rate by a quarter-point to 0.5 percent, the ECB is forecast to sit tight as central banks tackle soaring inflation.
The euro and British pound were largely steady before the announcements Thursday.
"The ECB is not anticipated to make any adjustments, but the recent increase in inflation has many traders pricing in a rate hike before the end of the year," noted Naeem Aslam, chief market analyst at Avatrade.
Eurozone inflation unexpectedly rose to a record 5.1 percent in January, official data showed Wednesday.
Analysts viewed the figure as a potential headache for ECB President Christine Lagarde, who had ruled out a rate hike this year.
Oil drops
Elsewhere Thursday, oil prices fell a day after top producing countries led by Saudi Arabia and Russia announced another modest increase in output.
Wall Street advanced Wednesday but the positivity was dealt a blow after the close as Facebook parent Meta delivered a disappointing earnings update.
Traders in recent weeks have been heavily occupied by the Federal Reserve's timetable for hiking interest rates, with speculation rife over how much it will raise them in March and how many more times this year.
Oil dips on potential for faster supply OPEC+ boost
Several officials have come out in recent days to soothe concerns about a hard and fast approach, while US inflation data released next week will be closely watched for an idea about the central bank's plans.
US private companies shed jobs last month for the first time since December 2020 as the Omicron coronavirus variant complicated business -- a potential harbinger of bad news for the upcoming government employment report due Friday.
"Forecasts for Friday's payrolls are now all over the place with many calling for a negative print in January," said National Australia Bank's Rodrigo Catril.
"Depending on the magnitude of the disruption, this can potentially become a solid excuse for the Fed to wait on the sidelines after a first rate hike in March."
In Asian trade Thursday, Tokyo, Sydney, Manila, Mumbai and Jakarta all fell.
Tokyo stocks close lower on profit-taking
Singapore and Seoul were both up about two percent on their first day after the Lunar New Year break.
Wellington was a standout, enjoying more gains as traders cheered news that New Zealand would begin easing its strict border restrictions this month with an aim to fully reopen by October.
Key figures around 1000 GMT
London - FTSE 100: FLAT at 7,579.88 points
Frankfurt - DAX: DOWN 0.5 percent at 15,537.79
Paris - CAC 40: DOWN 0.4 percent at 7,090.20
EURO STOXX 50: DOWN 0.7 percent at 4,192.42
Tokyo - Nikkei 225: DOWN 1.1 percent at 27,241.31 (close)
Hong Kong - Hang Seng Index: Closed for a holiday
Shanghai - Composite: Closed for a holiday
New York - Dow: UP 0.6 percent at 35,629.33 (close)
Euro/dollar: DOWN at $1.1289 from $1.1304 late Wednesday
Pound/dollar: DOWN at $1.3559 from $1.3573
Euro/pound: DOWN at 83.27 pence from 83.28 pence
Dollar/yen: UP at 114.77 yen from 114.42 yen
Brent North Sea crude: DOWN 0.9 percent at $88.67 per barrel
West Texas Intermediate: DOWN 1.2 percent at $87.22 per barrel