BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks may drift lower on Wednesday as investors ponder over the downside risks to growth, including the possibility of additional Covid-19 waves and the threat of inflation.
Asian markets slipped in cautious trade after higher U.S. Treasury yields weighed on U.S. tech firms overnight and pushed the dollar to a five-year high against the Japanese yen.
Geopolitical tensions also remained in investors' radar after North Korea reportedly fired a suspected ballistic missile off its east coast.
The euro hovered near a two-week low against the dollar while gold recovered some ground on easing U.S. bond yields after data showed growth in U.S. manufacturing slowed in December.
Oil traded flat after rising in overnight U.S. session as OPEC and its allies agreed to a scheduled increase in production for next month.
Also, the American Petroleum Institute reported U.S. stockpiles fell by 6.43 million barrels last week.
It's yet another busy day ahead on the Eurozone's economic calendar, with service sector and composite PMIs likely to be in focus.
Across the Atlantic, reports on service sector PMI and ADP nonfarm employment change along with the minutes of the latest Federal Reserve meeting may shed additional light on the outlook for monetary policy.
Minneapolis Fed President Neel Kashkari said Tuesday he supports two rate increases in 2022 to curb high inflation.
Comments from more Fed officials are due throughout the week ahead of the December jobs report, out Friday.
U.S. stocks ended mixed overnight, a day after the country reported more than 1 million new Covid cases. The Dow rose 0.6 percent to reach a new record closing high as banks benefited from rising Treasury yields.
The S&P 500 finished marginally lower while the tech-heavy Nasdaq Composite tumbled 1.3 percent, reflecting substantial weakness among software and biotechnology stocks.
European stocks hit a record high on Tuesday, thanks to easing worries around the Omicron coronavirus variant and strong economic data from Germany and the U.K.
The pan European Stoxx 600 climbed 0.8 percent. The German DAX gained 0.8 percent, France's CAC 40 index jumped 1.4 percent and the U.K.'s FTSE 100 added 1.6 percent.
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