New York - Global stock markets mostly fell Tuesday as investors played it safe ahead of a key meeting of the US Federal Reserve and the Bank of Japan abstained from extra stimulus.
Europe's main markets closed down 0.5% to 1.0%, while leading US indices were mostly modestly lower.
The Nikkei index in Japan fell 0.7% after the Bank of Japan kept its monetary stimulus unchanged as policymakers digested the impact of the negative interest rates announced in January.
The decision was widely expected, although analysts predict Governor Haruhiko Kuroda and his team will unleash more monetary firepower in the coming months to kick-start Japan's weak economy.
Analysts also expect no bombshells from the Fed on Wednesday. While the US central bank is not expected to hike interest rates, investors will gauge Federal Reserve Chair Janet Yellen's comments on the likelihood of tightening later this year.
"Caution took hold of stock markets on Tuesday ahead of the March meeting of the Federal Reserve," said analyst Jasper Lawler at CMC Markets.
The Fed meeting comes as central banks remain in the centre of market's thinking after the European Central Bank last week unveiled a range of aggressive stimulus measures.
Global stocks have stabilised over the last month after a bruising open to the year. But sentiment remains brittle.
"Fears still linger over central banks running out of ammunition to jump start global growth while China woes periodically sour risk appetite," said FXTM research analyst Lukman Otunuga.
Miners, pharma hit
London's benchmark FTSE 100 index was weighed down by a slump in mining shares after Chilean miner Antofagasta scrapped its dividend, providing investors with another reminder the industry is suffering from the hefty drop in metals prices.
Antofagasta plunged as much as 11% during the session, but recovered part of the ground to close down 4.5%. Fellow miner Anglo American tumbled 10.8% in London trading.
In the US, the ugliest performance came from Canadian pharma giant Valeant, which dived 51.5% after it warned it was at risk of a debt default and slashed its earnings forecast.
The Canadian drug maker, already under fire for its pricing and accounting practices, pointed to lacklustre growth for some of its core products. The potential default is due to delays in filing its annual report due to a review of its financial reporting and internal controls.
Pharma giants Pfizer, Merck and Eli Lilly all fell, while biotech companies like Celgene and Gilead Sciences dragged on the Nasdaq. All of these stocks lost between one and four percent.
Apple jumped 2.0% following a Morgan Stanley report that forecast iPhone sales at 56.5 million in the first quarter, better than expected by most analysts.