Portugal Colonial - US stocks steady before Powell's Fed testimony; Europe falls

Powell's remarks to Congress on Tuesday and Wednesday will be parsed for hints on the timing of US rate cuts, with most investors expecting a first reduction in September.

"Some expect Powell to sound cautious regarding the progress on inflation and tell the US politicians to be patient until the Fed gathers enough evidence that inflation is on a solid path toward their 2 percent target," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"But there is a chance that he sounds slightly more optimistic and willing to cut the interest rates sooner rather than later pointing at the slowing economic growth and loosening jobs market," she said.

Among New York's major indexes, the Dow was slightly lower in mid-afternoon trading while the wider S&P and tech-heavy Nasdaq were up slightly.

The Paris CAC 40 fell 1.2 percent -- following on Monday's 0.6-percent drop -- as investors fretted over the results of Sunday's elections, which produced a badly divided parliament where the largest block of seats were won by a left-wing alliance.

The French stock market "is the weakest performer in Europe," noted Kathleen Brooks, research director at XTB.

"Although France has no clear leader right now, the prospect of a far-left party calling the shots and increasing both taxes and spending is worrying investors, and thwarted hopes of a post-election recovery rally in French assets and the euro," she said.

London's top-tier FTSE 100 index fell 0.7 percent, dragged down by a four-percent drop in BP shares after the British energy giant warned second-quarter earnings could take an impairment hit of up to $2 billion.

In the United States, investors are also looking to consumer inflation data due Thursday for further indications that price increases are still easing as hoped, which would give the Fed greater confidence to start cutting rates.

US Fed chair Powell last week fanned hopes of a cut, saying the battle against inflation had made "progress" and the job market was cooling.

"The labor market continues to normalize and soften, but we think any further weakening might push the Fed to cut rates before the 2 percent inflation target is reached," Charles Schwab analysts said in a comment.

Wall Street's main indices mostly advanced on Monday, with the S&P 500 and Nasdaq both reaching new records.

The optimistic mood continued into Asia, with Tokyo climbing two percent to close at a record high.

Shanghai reversed early losses to end 1.3-percent after Moody's Ratings revised up its 2024 GDP forecast for China to 4.5 percent.

The dollar was little changed against the euro and pound.

- Key figures around 1540 GMT -

New York - Dow: DOWN 0.3 percent at 39,257.05 points

New York - S&P 500: UP 0.1 percent at 5,579.20 points

New York - Nasdaq composite: UP 0.2 percent at 18,435.37 points

London - FTSE 100: DOWN 0.7 percent at 8,139.81 points (close)

Paris - CAC 40: DOWN 1.6 percent at 7,508.66 (close)

Frankfurt - DAX: DOWN 1.3 percent at 18,236.19 (close)

EURO STOXX 50: DOWN 1.3 percent at 4903.62 (close)

Tokyo - Nikkei 225: UP 2.0 percent at 41,580.17 points (close)

Hong Kong - Hang Seng Index: FLAT at 17,523.23 (close)

Shanghai - Composite: UP 1.3 percent at 2,959.37 (close)

Euro/dollar: DOWN at $1.0812 from $1.0827 at 2030 GMT on Monday

Euro/pound: UP at 84.58 pence from 84.50 pence

Pound/dollar: UP at $1.2782 from $1.2810

Dollar/yen: UP at 161.46 yen from 160.80 yen

West Texas Intermediate: DOWN 0.7 percent at $81.78 per barrel

Brent North Sea Crude: DOWN 0.7 percent at $85.13 per barrel

S.Pimentel--PC