Sawt Falasteen - European stocks retreat, euro edges higher

The euro edged higher, meanwhile, as traders were looking ahead to a key ECB meeting Thursday.

Oil prices slid on renewed recession worries, while US stocks opened flat after a rally the previous day, which helped Asian stocks move higher.

US stocks had rebounded strongly Tuesday as companies' earnings soothed concerns about the impact on their bottom lines from soaring inflation and rising interest rates.

While several firms -- such as Apple and Johnson & Johnson -- have indicated they have concerns about the outlook, there is a feeling that the sell-off across markets could be reaching a bottom.

And some commentators have suggested the second half could see a healthy rally, despite official data continuing to show inflation rising strongly worldwide.

UK annual inflation hit a new 40-year high at 9.4 percent in June on surging motor fuel and food prices.

The same month, inflation in South Africa soared to its highest level in 13 years at 7.4 percent.

Against a backdrop of decades-high inflation also in the eurozone, all eyes were on the European Central Bank, which is widely expected to announce on Thursday its first rate hike in more than a decade.

Officials have their work cut out for them as they must also try not to drive a stake through the eurozone economy, which has also been hammered by an energy crisis.

Talk of a half-point hike -- instead of the quarter-point lift most expect -- has boosted the euro against the dollar since last week falling below parity for the first time in 20 years.

The European single currency was also helped by a Bloomberg News article saying Russia's Gazprom would resume deliveries through the Nord Stream 1 pipeline Thursday, albeit at reduced capacity.

Moscow shut down deliveries to Germany for technical reasons last week, but there had been fears it would keep the taps off in retaliation for European sanctions over its invasion of Ukraine.

Taking no chances, the European Commission on Wednesday urged EU countries to reduce their demand for natural gas by 15 percent over the coming winter months to overcome Russia's energy supply "blackmail".

In a statement, the EU's executive arm also asked member states to give it special powers to force through needed demand cuts if Russia cuts the Europe's gas lifeline.

"Russia is blackmailing us. Russia is using energy as a weapon and therefore, in any event, whether it's a partial major cut off of Russian gas or total cut off... Europe needs to be ready," Commission president Ursula von der Leyen told reporters.

- Key figures at around 1330 GMT -

London - FTSE 100: DOWN 0.4 percent at 7,268.54 points

Frankfurt - DAX: DOWN 0.8 percent at 13,201.54

Paris - CAC 40: DOWN 0.6 percent at 6,166.07

EURO STOXX 50: DOWN 0.7 percent at 3,560.94

New York - Dow: FLAT at 31,201.53

Tokyo - Nikkei 225: UP 2.7 percent at 27,680.26 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 20,890.22 (close)

Shanghai - Composite: UP 0.8 percent at 3,304.72 (close)

Euro/dollar: UP at $1.0234 from $1.0226 Tuesday

Pound/dollar: DOWN at $1.1992 from $1.2002

Euro/pound: UP at 85.31 pence from 85.19 pence

Dollar/yen: DOWN at 138.08 yen from 138.21 yen

West Texas Intermediate: DOWN 1.4 percent at $102.72 per barrel

Brent North Sea crude: DOWN 1.5 percent at $105.78 per barrel

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J.AbuShaban--SF-PST