Major stock markets mostly retreated Wednesday as investors braced for another interest rate hike decision by the US Federal Reserve.

The dollar also declined while oil prices stabilised.

Equities had been boosted Tuesday by Beijing's pledges of stimulus after a string of readings showed the post-Covid economic recovery was going off the rails in China.

Focus has returned to central banks' battle to tame inflation, with the Fed tipped to deliver another increase in borrowing costs on Wednesday.

While the outcome of the meeting is largely accepted, debate is now centred on whether it will announce another hike later in the year.

There had been hopes that this month would see the end of the tightening cycle but data Tuesday showing a key gauge of US consumer sentiment at a two-year high has stoked talk of more to come.

Post-meeting comments by bank chief Jerome Powell will be closely followed for an idea about officials' plans for the rest of the year.

CMC Markets analyst Michael Hewson said Powell was unlikely to repudiate his June guidance that the Fed's future decisions will be data dependent and that future hikes will be needed.

Investors will be listening for "how he frames that against the backdrop of CPI at three percent and that a lot of the impact from previous hikes has yet to bleed through," said Hewson, referring to the consumer price index, a measure of inflation.

After the Fed, attention turns to the European Central Bank, which announces its own rate decision Thursday, followed by the Bank of Japan on Friday.

The Paris stock market fared worse than London and Frankfurt on Wednesday, shedding 1.4 percent.

It was dragged down by luxury group LVMH, whose shares dropped five percent.

"LVMH reported first half results after the European close (Tuesday), and highlighted a weakening trend in US sales," noted Steve Clayton, head of equity funds at Hargreaves Lansdown.

On the upside, shares in Rolls-Royce, the British maker of aircraft engines and other power systems, soared more than 20 percent as a turnaround plan under new leadership delivered far better-than-expected results.

Shares in Google-owner Alphabet shot up 6.0 percent after beating earnings expectations.

Microsoft, which also beat expectations, saw its shares fall 4.1 percent on worries about future growth for its cloud and AI operations.

Shares in Boeing climbed 5.9 percent after the aerospace giant reported a smaller-than-expected loss, announced production rate increases on key commercial jets and described fewer supply chain problems.

Briefing.com analyst Patrick O'Hare said the general move lower on Wall Street was "the look of resignation that it is getting more challenging for this rally to keep running unabated in the near term".

- Key figures around 1530 GMT -

New York - Dow: FLAT at 35,457.53 points

London - FTSE 100: DOWN 0.2 percent at 7,676.89 (close)

Frankfurt - DAX: DOWN 0.5 percent at 16,131.46 (close)

Paris - CAC 40: DOWN 1.4 percent at 7,315.07 (close)

EURO STOXX 50: DOWN 1.0 percent at 4,346.15 (close)

Tokyo - Nikkei 225: FLAT at 32,668.34 (close)

Hong Kong - Hang Seng Index: DOWN 0.4 percent at 19,365.14 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,223.03 (close)

Euro/dollar: UP at $1.1073 from $1.1058 on Tuesday

Pound/dollar: UP at $1.2933 from $1.2902

Euro/pound: UP at 85.63 pence from 85.68 pence

Dollar/yen: DOWN at 140.35 yen from 140.95 yen

West Texas Intermediate: DOWN less than 0.1 percent at $79.59 per barrel

Brent North Sea crude: UP less than 0.1 percent at $83.68 per barrel

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