European stock markets started the day in positive territory but then reversed their gains, as investors cautiously awaited the Federal Reserve's interest rate decision.
News that eurozone manufacturing activity sank in October to the lowest level since the first lockdowns in 2020 also knocked stocks during the session.
S&P Global's PMI survey showed all of the largest economies on the bloc, except Ireland, saw the downturn deepen. Spain was the worst hit, followed closely by Germany.
However, pharmaceutical stocks pushed higher on London’s benchmark index after GSK (GSK.L) raised its outlook for the full year on the back of strong demand for its shingles vaccine and new drug launches.
It now expects annual sales growth of between 8% and 10%, with a rise in underlying earnings of between 15% and 17%.
Meanwhile, the cost of fresh food in the UK climbed at the fastest rate on record last month, at 13.3%. This was the steepest increase since the British Retail Consortium (BRC) started collecting the monthly data in 2005.
Food prices overall jumped by a record 11.6%, including a 9.4% rise in store-cupboard staples such as tinned food and other less perishable foodstuffs.
The BRC said the increases reflect a tight labour market and a jump in energy costs for retailers.
Wall Street stocks were also in the red on Wednesday as the dollar weakened due to investors bracing for the Federal Reserve’s policy outcome later in the day.
The Fed is expected to hike its benchmark rate by another three-quarters of a percent, pushing it up to 4%.
Neil Wilson of Markets.com said: "The market continues to hope for some kind of careful language about reducing the pace of hikes.
"In his remarks at the last two press conferences Powell has said that “at some point, as the stance of monetary policy tightens further, it will become necessary to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation”. Any change to this – perhaps suggesting that this point might be arriving – may be seen as a pivot."
Meanwhile, US companies added more jobs than expected last month, thanks to a surge in hiring at bars and restaurants, retailers and travel firms.
According to payroll operator ADP, private sector employment increased by 239,000 jobs in October, more than the 195,000 expected.
US markets lost their early momentum on Tuesday, finishing the session lower, after the latest job openings numbers, and ISM manufacturing report, showed that the American economy remained in decent shape, despite concerns over an economic slowdown.
Asian shares were mixed after initial cautious trading on Wednesday. The Nikkei (^N225) lagged behind its peers, ending just 0.1% lower on the day in Japan. Meanwhile, the Hang Seng (^HSI) rose 2.4% in Hong Kong, and the Shanghai Composite (000001.SS) rose 1.1%.
Chinese officials have ordered a critical iPhone production facility into an extended lockdown as Beijing continues to fight an outbreak of coronavirus.
Workers at the plant in Zhengzhou have been prevented from travelling as part of a seven day lockdown, which is likely to spark further discontent among staff.
Watch: How does inflation affect interest rates?