European shares edged up on Wednesday and gold fell as questions hung over the 'reflation' trades that had lifted markets since Donald Trump became U.S. president, while sterling held near a six-month high after Tuesday's calling of a snap UK election.
European shares drifted lower on Wednesday, while sterling battled back from a one-week low and regained its composure amid the drama of Britain formally triggering its exit process from the European Union.
European stocks fell for a third consecutive day, dragged lower by financials as shares in Deutsche Bank slid further after its $8.5 billion cash call, while expectations of higher U.S. interest rates supported the dollar.
The increasingly unpredictable French presidential election race unnerved European financial markets on Tuesday, tipping the euro towards its biggest fall this year and driving investors away from French government bonds.
If visibility and predictability are two foundations upon which stable financial markets are built, comments from the White House this week on the U.S. dollar suggest investors should brace for increased foreign exchange volatility.
Worries over Donald Trump's economic policies and the potential for U.S. policy errors rose sharply this month, according to a survey of fund managers released on Tuesday, prompting them to hold more cash even though they expect growth and inflation to rise further.