European, US equities dip awaiting Fed

New York - US and European stocks slid on Thursday in choppy trade as investors awaited a key speech by Federal Reserve Chair Janet Yellen that many hope will shed light on the Fed's policy stance.

With global economic growth in a slump and the US economy not expanding convincingly, investors are looking for a clearer picture of the way forward from the head of the world's most important central bank.

Even with few expecting that Yellen will tip her hand on the timing of the next increase in the benchmark federal funds rate, markets remained cautious.

Key US indices traded in a narrow range and finished off by 0.1% to0.2%.

In Frankfurt, the Dax 30 lost 0.9%, pushed down by a steeper fall than expected in the IFO German business confidence index for August, hitting its lowest level since December 2014.

"This appears to be a delayed negative reaction to the UK referendum decision of 23 June to leave the European Union," IHS Global Insight economist Howard Archer said.

In London the FTSE 100 dropped 0.3% and Paris shares gave up 0.7%.

Earlier in Asia, the Tokyo market lost 0.3% and Shanghai fell 0.6%, while the Hong Kong market was barely in the green.

Yellen's comments are in focus with world markets worried that leading central bankers - having pushed interest rates to ultra-low and even negative levels - have still proven unable to convincingly reverse a broad economic slump.

While she must address the contradictions that have bedevilled central bankers, including the Fed, Yellen is likely to come across relatively optimistic, analysts said.

She "should strike a moderately positive tone with respect to the near-term economic outlook," Deutsche Bank said in a client note.

"While we do not expect Yellen to explicitly pre-commit to raising interest rates at the September 20 to 21 (Fed) meeting, she will no doubt want to retain the optionality of hiking next month if economic and financial conditions permit."

Other than that, Oanda analyst Craig Erlam said markets "are lacking any real direction due to a total lack of catalysts."