LONDON: Global stock markets traded sideways Thursday as investors avoided risk on the eve of a speech by Federal Reserve head Jerome Powell, hotly anticipated for clues on the interest rate outlook.

The British pound, meanwhile, gained on optimism that an orderly Brexit may yet be on the cards.

"Caution is the word of the day... ahead of the key speech by the Fed chairman Jerome Powell," said analyst Naeem Aslam at trading firm ThinkMarkets.

Markets paid little attention to US President Donald Trump providing some fresh hope for China-US trade talks.

Wall Street, which posted healthy gains Wednesday thanks to blockbuster results from retailers, started Thursday's session on a modestly firmer note.

Minutes published Wednesday from the Fed's July meeting -- when it cut rates for the first time since the financial crisis -- said policymakers were flexible and borrowing costs were not on a "preset course" despite trade uncertainty and weak global growth.

- 'Nothing we didn't know' -

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"Markets remain in wait-and-see mode on Thursday, after the Fed minutes told us nothing we didn't already know," said analyst Craig Erlam at Oanda.

"The minutes on Wednesday highlighted just how difficult the current situation is, with the central bank deeply divided on the correct course of action, although there was a broad agreement that the July rate cut was a 'mid-cycle adjustment' rather than the start of an easing cycle."

Next up is Powell's address to the central bankers' symposium at Jackson Hole on Friday.

While the global economy stutters and the China-US trade row rumbles along, markets have found solace in expectations the Fed will continue to lower rates.

The minutes meanwhile made no mention of Trump's attacks on Powell's stewardship of the US central bank.

- Sterling's Boris bounce -

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Investors drew some mild encouragement from a key PMI survey released in Brussels on Thursday pointing to improving services and manufacturing activity in the eurozone.

"Today's PMI developments suggest that the industrial slide might have begun to bottom out, which sustains hopes that, absent any external shock, activity will start to pick up moderately by the end of the year," said analysts at Oxford Economics.

In commodities, world oil prices extended recent gains on optimism over US-China trade talks and US interest rate cut hopes.

However, Erlam sounded a cautious note.

"Oil looks in limbo at the moment. It's been steadily rising over the last couple of weeks but not in any convincing way, which suggests traders are waiting around for the next sell-off," he said.

In foreign exchange, the British pound spiked around the London midsession after Prime Minister Boris Johnson met with French President Emmanuel Macron, having held talks with German Chancellor Angela Merkel the day before.

"The pound is pushing higher after Merkel said we can find a solution to the backstop that will maintain the Integrity of the single market, and uphold the principles of the Belfast Agreement 1998. The softer stance from the EU is helping sterling," said David Madden at CMC Markets.

"Who will blink?", asked Kallum Pickering at Berenberg. Johnson is "playing a game of chicken with the EU and moderate Conservatives" and "bets that the EU will seek a compromise at the final hour", he said.

- Key figures around 1330 GMT -

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London - FTSE 100: DOWN 0.9 percent at 7,136.65 points

Frankfurt - DAX 30: UP 0.1 percent at 11,818.88

Paris - CAC 40: DOWN 0.3 percent at 5,421.88

EURO STOXX 50: FLAT at 3,394.80

New York - Dow: UP 0.3 percent at 26,292.08

Tokyo - Nikkei 225: UP 0.1 percent at 20,628.01 (close)

Hong Kong - Hang Seng: DOWN 0.8 percent at 26,048.72 (close)

Shanghai - Composite: UP 0.1 percent at 2,883.44 (close)

Euro/dollar: DOWN at $1.1084 from $1.1085 at 2100 GMT on Wednesday

Pound/dollar: UP at $1.2234 from $1.2130

Euro/pound: DOWN at 90.63 pence from 91.39 pence

Dollar/yen: DOWN at 106.56 yen from 106.62 yen

Brent North Sea crude: UP 42 cents at $60.72 per barrel

West Texas Intermediate: UP 65 cents at $56.31