LONDON (AP) — Markets grew more edgy in the run-up to Wednesday's testimony from U.S. Federal Reserve chairman Ben Bernanke.
Stocks, which had been solid during the Asian session, started to drift lower as the European day progressed and Wall Street was poised for a modest retreat at the open.
Bernanke's testimony to lawmakers in Congress is the key event for markets this week. Investors will be particularly interested to see if he spells out a more precise timetable for when the Fed starts to reduce its monetary stimulus. The Fed is currently spending $85 billion a month buying financial assets in the markets in order to lower long-term borrowing rates and shore up the U.S. recovery.
In recent weeks, the expectation had been that the Fed might start the so-called tapering in September but a recent run of uninspiring U.S. economic figures have put that assumption into question. Uncertainty is never a good thing in markets and investors will be looking for more clarity.
"Equity traders are certainly in a cautious mood ahead of Ben Bernanke's testimony to lawmakers," said Mike McCudden, head of derivatives at Interactive Investor.
In Europe, the FTSE 100 index of leading British shares was down 0.5 percent at 6,524 while Germany's DAX fell 0.7 percent to 8,140. The CAC-40 in France was 0.6 percent lower at 3,827.
Wall Street was poised for a lower opening, with Dow futures and the broader S&P 500 futures down 0.2 percent.
The dollar was steady ahead of Bernanke's testimony, which could have big repercussions for the currency. As well as boosting stock markets, the Fed's monetary stimulus over the past few years has largely kept a lid on the dollar. In late morning London trading, the euro was steady at $1.3151 while the dollar was 0.4 percent higher at 99.58 yen.
"We expect that Bernanke will be no more dovish than he was last week meaning that the dollar index could find some support after the testimony," said Jane Foley, senior currency strategist at Rabobank International.
Bernanke last week said the central bank would not ease its stimulus before the economy was ready and that the U.S. needs "highly accommodative monetary policy" — or low interest rates — for the foreseeable future.
The next batch of U.S. corporate earnings will also be monitored, especially those from Bank of America, eBay and Intel.
Earlier in Asia, the mood was a bit perkier.
China's Shanghai Composite Index fell 1 percent to 2,044.92 while Tokyo's Nikkei 225 gained 0.1 percent to 14,615.04. Hong Kong's Hang Seng rose 0.3 percent to 21,371.87 and Seoul's Kospi added 1.2 percent to 1,889.50. B
Oil prices drifted lower alongside equities, with the benchmark New York rate down 72 cents at $105.28 a barrel.