LONDON (AP) — A forecast-busting U.S. jobs report kept markets in check Wednesday as investors pondered the likelihood of an imminent monetary tightening from the Federal Reserve.
A run of solid economic reports has ratcheted up expectations that the Fed may decide to begin reducing the $85 billion of monthly asset purchases it makes at its policy meeting on Dec. 18.
Since the stimulus has over the past few years helped shore up stock markets, its potential withdrawal has raised concerns, even if it is predicated on an improving economic outlook.
The big economic release this week will be Friday's official nonfarm payrolls data for November. The private payrolls report from ADP on Wednesday raised speculation that the government figures will be strong. ADP said the U.S. economy generated 215,000 jobs during November, more than the consensus in markets for a 165,000 or so increase. October's increase was also revised up to 184,000.
"The market is trying to work out whether good news is bad but clearly this report argues in favor of a December tapering," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
In Europe, the FTSE 100 index of leading British shares fell 0.3 percent to close at 6,509.97 while Germany's DAX fell 0.9 percent to 9,140.63. The CAC-40 in France shed 0.6 percent to 4,148.52.
In the U.S., the Dow Jones industrial average was down 0.2 percent at 15,882 while the broader S&P 500 dropped the same rate to 1,791.80.
The dollar's near-term fortunes could hinge on Friday's payrolls data, too. On Wednesday, the euro was down 0.2 percent at $1.3563 and the dollar was down 0.1 percent at 102.38 yen.
Earlier in Asia, most markets were under pressure. Japan's Nikkei 225 was the clear loser, closing down 2.2 percent to 15,407.94 from near six-month highs. Hong Kong's Hang Seng fell 0.8 percent to 23,728.70 and South Korea's Kospi slid 1.1 percent to 1,986.80.
But China's Shanghai Composite added 1.3 percent to 2,251.76 and Australia's S&P/ASX 200 gained 0.3 percent to 5,273.75.