Portugal Colonial - Stocks slip before US economic updates

Frankfurt, Paris and London closed in the red and Wall Street also retreated, the tech-heavy Nasdaq index shedding more than one percent.

"Equity markets are back in the red as investors appear to prepare themselves for a disappointing earnings season for big tech," said Craig Erlam, senior market analyst at trading platform OANDA.

"Layoffs, missed headline numbers and downbeat forecasts are quickly becoming the norm."

Investors will track later Wednesday the latest results from electric carmaker Tesla, headed by Twitter owner and billionaire Elon Musk.

That follows earlier earnings gloom from US corporate titans Microsoft and Johnson & Johnson, while aviation giant Boeing on Wednesday reported a quarterly loss on revenues that fell short of analyst estimates.

In tech, Microsoft offered a disappointing outlook on its Azure cloud computing business, after recently announcing plans to lay off 10,000 staff.

The Azure forecast "laid bare an understanding that growth is slowing and that business conditions have gotten more challenging", said Briefing.com analyst Patrick O'Hare.

"Investors are grappling with valuation concerns and the notion that the market might have gotten ahead of itself with the January rally effort," he added.

Swissquote analyst Ipek Ozkardeskaya said Tesla was "doing very well... but record deliveries weren't enough to meet the market expectations over the past three quarters".

"And unfortunately, the expectations make the market price," she said.

Markets will absorb fourth-quarter US economic growth data on Thursday.

- Smaller Fed rate hike? -

Markets have enjoyed a strong start to the year as a slowdown in inflation gives central banks room to temper their interest rate hikes. Now however, the focus is turning to the economic impact of last year's increases.

Worries about the growth outlook, and the impact of higher rates on company profits, are also offsetting optimism over China's reopening from years of zero-Covid measures.

Attention is also turning to next week's Federal Reserve policy meeting, with speculation growing that it will lift rates by 0.25 percentage points -- a smaller hike than in previous decisions.

"Markets may have to get used to the idea of headline interest rates staying at current levels for much longer than is currently being priced," said CMC Markets analyst Michael Hewson.

Oil firmed as traders weighed the prospects of recession against the outlook for demand from China as it emerges from its zero-Covid policy.

- Key figures around 1630 GMT -

London - FTSE 100: DOWN 0.2 percent at 7,744.87 points (close)

Frankfurt - DAX: DOWN 0.1 percent at 15,081.64 (close)

Paris - CAC 40: DOWN 0.1 percent at 7,043.88 (close)

EURO STOXX 50: DOWN 0.1 percent at 4,148.11

New York - Dow: DOWN 0.9 percent at 33,439.33

Tokyo - Nikkei 225: UP 0.4 percent at 27,395.01 (close)

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Euro/dollar: UP at $1.0888 from $1.0887 on Tuesday

Pound/dollar: UP at $1.2352 from $1.2334

Euro/pound: DOWN at 88.13 pence from 88.26 pence

Dollar/yen: DOWN at 129.85 yen from 130.17 yen

Brent North Sea crude: UP 0.2 percent at $86.39 per barrel

West Texas Intermediate: UP 0.5 percent at $80.53 per barrel

A.P.Maia--PC