European stock markets were little changed and the euro slipped against the dollar on Wednesday as investors waited for key monetary policy decisions by the European Central Bank and Bank of England.
Markets expect an ECB rate cut on Thursday along with a decision by the BoE to pump out an additional STG50 billion ($A76.78 billion) in stimulus to boost recession-hit Britain.
When trading ended for the day in London, the benchmark FTSE 100 index was essentially unchanged at 5,684.47 points.
Frankfurt's DAX 30 edged 0.20 per cent lower to 6,564.80 points and in Paris the CAC 40 gave up 0.11 per cent to close at 3,267.75.
In foreign exchange deals, the euro dropped to $1.2561 from $1.2607 late on Tuesday in New York.
"Today's price action has seen the end of the global risk-rally that kicked off last Thursday by euro-positive headlines out of the EU summit" in Brussels last week, ETX Capital strategist Ishaq Siddiqi commented.
"Clients have given into temptation, booking profits before the release of key economic data from both sides of the Atlantic due tomorrow and Friday," he added.
IG Index dealer Rupert Osborne said: "The hope is that both the Bank of England and the ECB will undertake policy action, with the former adding 50 billion ... in response to weaker economic figures, while the latter cuts interest rates by 25 basis points" to ease eurozone tensions.
New York markets were closed on Wednesday for Independence Day celebrations, making for a subdued tone on European stock exchanges, traders said.
Ahead of the European monetary policy decisions, data showed that Italy's gross public deficit had reached eight per cent of gross domestic product (GDP) in the first quarter of 2012, reflecting lower tax revenues and higher interest payments.
Italy entered recession in the second half of last year and the government is forecasting a contraction of 1.2 per cent this year.
In company news, all eyes were again on the British bank Barclays, with former chief executive Bob Diamond grilled by British lawmakers on Wednesday, a day after he quit over an interest rate rigging scandal.
Barclays chief operating officer Jerry del Missier and the bank's chairman Marcus Agius also resigned this week.
Barclays' shares ended the day with a loss of 1.50 per cent at 164.55 pence, after rising as high as 170 pence in afternoon trading.
Looking ahead, "other than the central banks, tomorrow sees Ireland return to the debt markets for the first time since its bailout in September 2012, planning to sell 500 million euros of three-month bills," Siddiqi noted.
Ireland and Spain have benefited from a eurozone decision last week to allow the rescue fund, the European Stability Mechanism, to recapitalise weakened banks directly, easing pressure on the host countries' accounts.
