Portugal Colonial - European stocks, dollar slip before US rate decision

The Fed is widely expected to cut borrowing costs later in the day for the first time since the start of the Covid pandemic in early 2020 -- but uncertainty remained over the size of the reduction.

Debate over the past weeks has been on whether the US central bank will cut by 25 or 50 basis points after the inflation rate sharply cooled.

Richard Hunter, head of markets at Interactive Investor, noted that a more aggressive cut "could equate to an economic outlook which is weaker than currently expected".

There are concerns over signs of weakness in the world's biggest economy, which follow on from worries about a growth slowdown in China, the next largest.

London, Paris and Frankfurt stock markets dropped in early afternoon deals Wednesday after Tokyo and Shanghai closed higher.

Wall Street experienced a tepid Tuesday, with many investors keeping their powder dry until the Fed's decision and boss Jerome Powell's post-meeting statement.

Official data Tuesday showed US consumer spending cooled in August, but not as much as expected.

The reading helped temper lingering worries that the country was in danger of slipping into recession, which had been stoked in the past two months by big misses on American jobs-creation.

Chances of a 50 basis-points cut remaining a firm possibility despite the consumer reading -- coupled with increased expectations that the Bank of England would decide against a consecutive reduction in UK borrowing costs Thursday -- sent the pound rising about half a percent against the dollar.

The BoE is seen sitting tight following a regular meeting, as official data Wednesday showed British annual inflation held at 2.2 percent in August.

Elsewhere on Wednesday, oil prices slid as rising crude inventories in the United States offset renewed tensions in the Middle East, according to market followers.

Hundreds of pagers exploded simultaneously across Lebanon Tuesday, killing 12 people. The unprecedented attacks, which appear to have targeted the Hezbollah militant group, have been blamed on Israel, which has yet to comment.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.7 percent at 8,255.26 points

Paris - CAC 40: DOWN 0.4 percent at 7,455.63

Frankfurt - DAX: DOWN 0.1 percent at 18,702.46

Tokyo - Nikkei 225: UP 0.5 percent at 36,380.17 (close)

Shanghai - Composite: UP 0.5 percent at 2,717.28 (close)

Hong Kong - Hang Seng Index: Closed for a holiday

New York - Dow: FLAT at 41,606.18 (close)

Pound/dollar: UP at $1.3219 from $1.3162 on Tuesday

Euro/dollar: UP at $1.1135 from $1.1116

Dollar/yen: UP at 141.58 yen from 141.22 yen

Euro/pound: DOWN at 84.25 pence from 84.46 pence

West Texas Intermediate: DOWN 1.4 percent at $70.21 per barrel

Brent North Sea Crude: DOWN 1.3 percent at $72.75 per barrel

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P.Cavaco--PC