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European stock markets fall as central banks flag concerns

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U.S. stock futures push higher, dollar rises in Europe

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Chinese shares slide after tech-driven rally

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BoE expected to hold UK rates at 1200 GMT

By Marc Jones

LONDON, March 20 (Reuters) - World markets slipped on

Thursday as signals from the U.S. Federal Reserve and a number

of other top central banks that they remain in rate cut mode

amid global uncertainty kept the bears on top.

Trade war and actual war worries pushed Europe's main share

indexes nearly 1% into the red early on, while the dollar and

safe-haven government bonds both rose and gold scored its latest

record high overnight.

There was little reaction as Switzerland cut its interest

rates back towards zero. Sweden kept its borrowing costs steady,

while the Bank of England was also expected to sit tight with

its latest rate decision at 1200 GMT.

Wall Street futures were still pointing higher, just

about.

The Fed on Wednesday had left U.S. rates unchanged too but

traders were pleased to see it maintain a projection for two

quarter-percentage-point rate cuts by year-end.

Policymakers did revise up their inflation forecast for the

year and marked down their outlook for economic growth, citing

risks from U.S. President Donald Trump's tariff policies.

Still, investors took comfort from the Fed's "dot plot" and

Chair Jerome Powell's comments that tariff-driven inflation

would be "transitory" and largely confined to this year.

"We think unemployment will be the ultimate arbiter," PIMCO

economist Tiffany Wilding said, predicting the Fed would "cut

aggressively" if the jobless rates starts to move higher.

The prospect of further Fed easing this year saw gold

scale yet another record high of $3,057.21.

In the bond markets U.S. Treasury yields dipped to 4.22% and

Germany's Bund yields eased to 2.77% after hitting

their lowest - 2.748% - in almost two weeks the day before and

well down from last week's the 1-1/2 year high of 2.938%.

That had all kept the dollar near its recent 5-month

low although it managed to nudge up 0.2% to $1.0893 against the

euro, $1.2971 against the pound and to 148.40

yen.

Sterling had been as high as $1.3015 - a four month

high - overnight. The Bank of England has its March interest

rate decision later and, like the Fed, is expected to stay on

hold - at 4.5% in the BoE's case.

"We expect the (Monetary Policy Committee) members to signal

the desire to see further disinflation as a reason to keep

policy on hold this month. They will affirm that the policy

direction remains towards further easing, but the timing will be

data-dependent," ANZ analysts said.

Both Switzerland's SNB and Sweden's Riksbank had already

come out with their decisions.

The former trimmed it borrowing costs back to just 0.25%

with a warning about U.S. trade tariffs, while the Swedes kept

theirs at 2.25% amid stubborn inflation and a sluggish economy.

There was little reaction, other than a fractional dip by

the Swiss franc.

SNB Chairman Martin Schlegel said uncertainty around the

global economy and inflation had increased significantly.

"As a result, the outlook for inflation in Switzerland too

is currently very uncertain. At present, the risks are

predominantly to downside," he said after the SNB's rate

decision.

CHINA DRAGS

The post-Fed cheer had failed to rally Asia overnight, with

MSCI's broadest index of Asia-Pacific shares outside Japan

finishing its day flat.

That was mainly due to China and Hong Kong.

Both markets have been on hot streaks this year, but

Thursday's 2.2% drop in the Hang Seng was its worst of

the month and Chinese online giants Tencent and Baidu ( BIDU )

both tumbled nearly 4% as their respective 30% and 70%

gains this year ran out of steam.

Carlos von Hardenberg co-founder of MCP Emerging Markets

described the recent surge in China tech stocks as "a bit of a

suckers rally, because it reached the point where the valuation

was getting completely out of whack".

"I think it could evaporate almost overnight because we are

in the middle of a gigantic war about technology leadership."

China's central bank had held its benchmark lending rates

steady for the fifth straight month on Thursday, matching market

expectations.

The yuan, which has been pressured by China's

wide yield differentials with the United States, barely budged

at 7.2354 per dollar in the onshore market. Its offshore

counterpart inched down 0.1% to 7.2383 per dollar.

Elsewhere, the Australian dollar tumbled 1% in

response to weaker-than-expected employment figures while data

showing New Zealand's economy grew faster than forecast at the

end of last year could prevent a 1.2% drop in the Kiwi dollar

.

In commodities, oil prices ticked higher owing in part to an

escalation of tensions in the Middle East as more Israeli

airstrikes across Gaza left the ceasefire with Hamas all but

over.

Brent crude futures rose 0.6% to $71.24 a barrel,

while U.S. West Texas Intermediate crude (WTI) made

similar gains to $67.52 per barrel.