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Europe's leading stock markets fell on Wednesday and the euro dropped against the dollar with the focus firmly on future central bank policy on both sides of the Atlantic.
Asian indices closed lower and Wall Street took a beating on Tuesday as a drop in the US trade deficit fuelled expectations that the Federal Reserve's stimulus programme may soon be wound up.
Dealers were meanwhile awaiting the Bank of England's latest growth and inflation forecasts and clues from the BoE's new governor Mark Carney regarding the bank's future policy direction over stimulus and interest rates.
In morning deals, London's FTSE 100 index of leading shares slipped 0.37 percent to stand at 6,580.08 points.
Frankfurt's DAX 30 shed 0.52 percent to 8,256.21 points and the CAC 40 in Paris lost 0.40 percent to 4,016.45.
"Big day for BoE governor Mark Carney as he will unveil a framework for the central bank's forward guidance," said Ishaq Siddiqi, market strategist at traders ETX Capital.
"The question for many in the market will be how the BoE can justify low rates for an extended period if the UK economy continues to show strong signs of growth?"
Sterling was stable versus the European single currency and lower against the dollar ahead of remarks from Canadian national Carney, who became BoE head at the beginning of July.
The euro fell to $1.3279 from $1.3304 late in New York on Tuesday. The dollar slid to 96.94 yen from 97.72 yen.
"It is highly likely that the BoE will adopt a form of forward rate guidance today which will be explained by governor Carney at his first press conference," said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi in London.
Asian stock markets closed lower on Wednesday, with Tokyo leading regional declines with a four percent plunge after comments from Federal Reserve officials sparked jitters over a likely pullback of the US stimulus.
And US stocks, which last week hit record highs, lost ground for a second day on Tuesday following indications that the Federal Reserve will begin tapering off its $85 billion a month quantitative easing programme.
On the London Bullion Market, the price of gold dipped to $1,278.58 an ounce from $1,280.50 on Tuesday.
On the corporate front, shares in TUI Travel slumped 4.68 percent to 382.7 pence as traders bet on whether Europe's biggest tour operator would meet its full-year operating profits target after posting fresh net losses.