European markets opened lower on Wednesday ahead of the release of the Bank of England's inflation report.
The Stoxx Europe 600 index opened 0.3% lower to 363, while Britain's FTSE 100 fell 0.1% in early deals.
France's CAC 40 was down 0.2%, while Italy's FTSE MIB and Spain's IBEX were down 0.3%. Germany's DAX was down 0.4% in opening trade.
Market participants will be tracking the BoE's inflation report and newly appointed Governor Mark Carney's first news conference, discussing 'forward guidance' on interest rates. Carney took over the central bank in July.
"When Carney came in everyone expected him to be quite dovish, in fact it didn't turn out that way. He is embarking on a new path for the Bank of England," said Khoon Gon, senior FX strategist at ANZ.
Forex traders will be eyeing sterling levels, which Gon says will outperform in the near-term.
Elsewhere, Germany is due to auction April 2018 bonds worth €4bn at 1030 BST. Germany will release monthly industrial production data during the day.
Switzerland will put out monthly and annual inflation data. Swiss consumer sentiment remained relatively stable in July 2013, government data showed on Wednesday.
In company news, insurer Old Mutual, with headquarters in London on Wednesday reported a 14% increase in operating profit to £801m during the first-half of 2013. The group will dole out an interim dividend of 2.1 pence per share, up 20%.
Dutch banking and insurance group ING on Wednesday reported a 39% drop in second-quarter net profit. Franco-Belgian bank Dexia, Stockholm-based security services firm Securitas, telecoms company Swisscom and gold miner Randgold Resources are also expected to put out earnings updates during the day.
In Asia and the US
In Asia, the Japanese Nikkei finished 4% lower on Wednesday. Australia's S&P/ASX index closed 1.85% lower while South Korea's Kospi closed 1.48% lower.
Earlier in Asia, markets dropped to four-week lows on Wednesday as renewed Federal Reserve stimulus fears dampened sentiments.
Market participants await clarity on the timing of the US Federal Reserve's planned quantitative easing tapering. However, comments from two top Fed officials on Tuesday failed to provide the same.
Atlanta Fed president Dennis Lockhart said the initial cut-back in the central bank's asset-buys could start at any of the three remaining Federal Open Market Committee (FOMC) meetings this year. Elsewhere, Chicago Fed President Charles Evans agreed that the central bank will possibly cut back on its bond-buying programme later in 2013.
The FOMC is due to meet on 17 September, 29 October and 17 December. The September and December meetings will be followed by a news conference led by Fed Chairman Ben Bernanke.
In Japan, the country's central bank has kicked off a two-day meeting and is widely expected to continue with its asset buys.
On Wall Street, Fed jitters forced investors to sell. The Dow finished 93.39 points lower at 15,518.74, pulled down by IBM and Hewlett-Packard.
The S&P 500 closed 9.77 points lower at 1,697.37, while the Nasdaq ended 27.18 points lower at 3,665.77.
The US Federal Reserve remains determined to start trimming its $85bn bond-buying programme later this year but continues to remain tight-lipped about when the planned reduction will take place. On 31 August, a Fed statement said the central bank will continue buying mortgage and treasury securities to further strengthen the US economy which it said was still challenged by federal austerity measures.
A reduction in monetary stimulus could lead to a detrimental knock-on effect for emerging markets. A reduction in QE would raise bond yields in the US, which in turn would raise eurozone rates and drain money from emerging markets.
A sudden withdrawal of foreign funds from emerging markets could also be catastrophic, as has happened before, during the Asian and Russian financial crises of 1997 and 1998 respectively.