Portugal Colonial - European stock markets rebound as focus switches to US

The dollar traded mixed versus main rivals, with the euro steadier following heavy falls on political uncertainty in Europe fuelled by shock EU election results at the weekend.

"Today marks the peak of the week for potential market volatility, with the US CPI inflation gauge providing the precursor to the... (US) interest rate decision," noted Joshua Mahony, chief market analyst at Scope Markets.

While a surge in Apple's share price helped Wall Street reach another record high Tuesday, investors are growing increasingly nervous that the US central bank will hold off on cutting borrowing costs for an extended period as officials determine if prices have been brought under control.

Forecasts for the number of reductions the Fed will make in 2024 have been whittled down from six at the start of the year to just three at best now, following a string of figures indicating the US labour market remains solid and the economy is still in rude health.

The bank is widely expected to stand pat Wednesday on rates but its "dot plot" guidance, which shows officials' outlook for rates this year, is the main event.

There was little reaction to data showing Chinese consumer prices rose slightly less than expected last month.

Markets continued to track events in France, whose President Emmanuel Macron called snap elections in reaction to his centrist party's rout by the far right in EU-wide polls.

The weekend's result was echoed across the bloc, sparking worries about unity at a time when it faces huge economic and security risks.

Macron's decision led ratings agency Moody's to warn it could lower France's credit score because it raises the risk of "political instability".

Euro weakness following the election results mirrored a steep drop in European equities, with Paris losing more than one percent on each of the past two days.

But major eurozone indices Paris and Frankfurt rebounded slightly Wednesday, while London recovered following data showing the UK economy stagnated in April.

While growth stalled, analysts said it could put pressure on the Bank of England to cut interest rates soon after next month's UK general election.

Elsewhere Wednesday, the European Union warned it would hit Chinese electric cars with higher import taxes from next month after an anti-subsidy probe, unless the issue can be resolved through dialogue.

Ahead of the decision, Beijing warned such a move would "harm" Europe's interests.

- Key figures around 1045 GMT -

London - FTSE 100: UP 0.6 percent at 8,195.27 points

Paris - CAC 40: UP 0.3 percent at 7,814.83

Frankfurt - DAX: UP 0.5 percent at 18,462.31

EURO STOXX 50: UP 0.5 percent at 4,990.24

Tokyo - Nikkei 225: DOWN 0.7 percent at 38,876.71 (close)

Hong Kong - Hang Seng Index: DOWN 1.3 percent at 17,937.84 (close)

Shanghai - Composite: UP 0.3 percent at 3,037.47 (close)

New York - Dow Jones: DOWN 0.3 percent at 38,747.42 (close)

Euro/dollar: UP at $1.0758 from $1.0743 on Tuesday

Euro/pound: DOWN at 84.29 pence from 84.31 pence

Pound/dollar: UP at $1.2756 from $1.2739

Dollar/yen: UP at 157.35 yen from 157.11 yen

Brent North Sea Crude: UP 1.0 percent at $82.74 per barrel

West Texas Intermediate: UP 1.2 percent at $78.84 per barrel

O.Gaspar--PC