San Francisco Frontiers - European stock markets falter

Paris and Frankfurt were the biggest fallers, shedding more than one percent nearing the half-way stage, with investors continuing to track fallout from shock European Union elections at the weekend.

Oil prices were down nearly one percent, while the euro and pound steadied versus the dollar.

The European single currency has recovered from sharp losses in recent sessions, after French President Emmanuel Macron said he would not resign should his party lose a snap elections he called after its defeat to the far right in EU-wide polls.

In the United States, the Federal Reserve left its key lending rate unchanged on Wednesday and pencilled in just one rate cut this year, down from the three expected in March.

Despite US annual inflation dipping to 3.3 percent last month, the fall was below expectations, while the consumer price index remains a fair bit above the Fed's two-percent target.

"Fed chair Jerome Powell didn't give a huge amount away, although it felt telling that he was fairly cautious about the cooler-than-expected inflation figures from earlier in the day," noted AJ Bell investment director Russ Mould.

"The central bank is clear that it wants further signs inflation is on the path to the magic two-percent level before it is prepared to start cutting rates. One major sticking point being the continued tight labour market conditions."

Investors were also keeping an eye on the yen as the Bank of Japan started a two-day policy meeting, with speculation swirling that it is preparing the ground for a further tightening after lifting interest rates in March for the first time in 17 years.

Japan has been an outlier in recent years, deciding against raising interest rates to fight high inflation. And just as major central banks are looking to cut borrowing costs, the BoJ has decided to start hiking.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.5 percent at 8,174.59 points

Paris - CAC 40: DOWN 1.4 percent at 7,758.67

Frankfurt - DAX: DOWN 1.1 percent at 18,424.88

EURO STOXX 50: DOWN 1.1 percent at 4,981.29

Tokyo - Nikkei 225: DOWN 0.4 percent at 38,720.47 (close)

Hong Kong - Hang Seng Index: UP 1.0 percent at 18,112.63 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,028.92 (close)

New York - Dow Jones: DOWN 0.1 percent at 38,712.21 (close)

Euro/dollar: DOWN at $1.0800 from $1.0811 on Wednesday

Euro/pound: UP at 84.53 pence from 84.45 pence

Pound/dollar: DOWN at $1.2777 from $1.2797

Dollar/yen: UP at 157.18 yen from 156.86 yen

West Texas Intermediate: DOWN 0.8 percent at $77.86 per barrel

Brent North Sea Crude: DOWN 0.8 percent at $81.94 per barrel

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V.Mitchell--SFF