European equity markets mostly fell Wednesday despite a bright Asian performance and fresh Wall Street records as anxious traders awaited the outcome of the Federal Reserve's interest-rate meeting.

The yen weakened further against the dollar, one day after the Bank of Japan pulled the plug on its negative interest rate policy to deliver a rare hike in borrowing costs.

London stocks dipped despite a sharper-than-expected slowdown to UK inflation, which fuelled speculation that the Bank of England could start cutting its key rate in June rather than later in the year.

Europe's luxury good sector was hit, one day after French giant and Gucci-owner Kering issued a profit warning over weak Chinese demand.

Kering shares slid about 14 percent in Paris and Burberry shed nearly five percent in London.

- Focus remains on Fed -

Later Wednesday, Fed policymakers are widely expected to hold US rates at a two-decade high, but traders will also be watching the "dot plot" of projections for how many cuts they see this year.

Analysts are forecasting the Fed to begin cutting rates from June -- having massively hiked borrowing costs along with other central banks to tackle soaring consumer price inflation.

At the turn of 2024, markets had factored in up to six cuts in rates this year by the Fed, but a spate of strong data -- particularly pointing to sticky inflation -- has forced investors to revise that down to a total of three this year.

That is in line with the Fed's December projection, but there are worries policymakers could be spooked into lowering their outlook to just two -- or 50 basis points.

Some market participants are also concerned that the first reduction -- anticipated by many to come in June -- could be pushed back.

Still, Wall Street investors remained upbeat, pushing all three main indices higher Tuesday thanks to a tech rally, with the S&P 500 chalking up another record.

- Lagarde warning -

In the eurozone on Wednesday, European Central Bank President Christine Lagarde warned of the risk of acting "too late" on interest rate cuts, reaffirming the likelihood that the first reduction in the bloc's borrowing costs would come in June.

"We cannot wait until we have all the relevant information," Lagarde said at a conference in Frankfurt.

"To do so could risk being too late in adjusting policy."

The yen remained on the backfoot after the Bank of Japan suggested that Tuesday's interest-rate hike -- its first in 17 years -- would unlikely be followed by more any time soon.

The move marked the end of the BoJ's ultra-loose monetary policy, which was an outlier as other central banks earlier ramped up rates to combat surging inflation.

- Key figures around 1115 GMT -

London - FTSE 100: DOWN 0.2 percent at 7,724.13 points

Paris - CAC 40: DOWN 0.5 percent at 8,156.48

Frankfurt - DAX: UP 0.2 percent at 18,021.17

EURO STOXX 50: DOWN 0.1 percent at 5,002.03

Hong Kong - Hang Seng Index: UP 0.1 percent at 16,543.07 (close)

Shanghai - Composite: UP 0.6 percent at 3,079.69 (close)

Tokyo - Nikkei 225: Closed for holiday

New York - Dow: UP 0.8 percent at 39,110.76 (close)

Dollar/yen: UP at 151.67 yen from 150.88 yen on Tuesday

Euro/dollar: DOWN at $1.0840 from $1.0867

Pound/dollar: DOWN at $1.2695 from $1.2721

Euro/pound: DOWN at 85.38 pence from 85.40 pence

West Texas Intermediate: DOWN 0.9 percent at $82.70 per barrel

Brent North Sea Crude: DOWN 0.7 percent at $86.76 per barrel