Asian markets edged down Thursday before a European Central Bank meeting amid investor fears that a widely expected rate cut may not be enough to stem the spiralling eurozone debt crisis.
With little guidance from the US where markets were closed for a holiday Wednesday, all eyes were on Europe where the Bank of England was also expected to unveil an additional $78 billion in stimulus to boost recession-hit Britain.
The euro held steady against the dollar in cautious trade.
Tokyo was flat, edging down 0.08 percent, Hong Kong slipped 0.50 percent, and Sydney was down 0.31 percent. Shanghai was off 1.37 percent and Seoul fell 0.15 percent.
"Market energy is lacking as investors are reluctant to make aggressive bets before possible overseas news," Hiroichi Nishi, SMBC Nikko Securities general manager of equities, told Dow Jones Newswires.
The ECB is widely expected to trim eurozone borrowing costs later Thursday by a quarter of a percentage point to a new record low of 0.75 percent, central bank watchers predicted.
It is hoped the move will build on the progress made by European leaders last week, when they agreed to a surprise deal to help the ailing eurozone, which has lifted markets.
The leaders agreed emergency measures at a Brussels summit aimed at helping crisis-hit Italy and Spain, as well as $150 billion in new stimulus.
But with the rate cut now factored in, some analysts argued there could be disappointment without additional measures from the bank, such as the resumption of its bond-buying programme which has lain dormant for 16 weeks.
"We expect the ECB to cut its main interest rate by 25 basis points to 0.75 percent," said Berenberg Bank economist Christian Schulz, who warned that such a move alone "would probably disappoint markets".
European stock markets were little changed on Wednesday as investors awaited the ECB and BoE decisions, with London ending almost unchanged and Frankfurt and Paris edging down.
After the ECB meeting, investors will focus on a key US jobs report to be released on Friday, amid hopes that more disappointing data from the world's biggest economy will spur the Fed into a new round of quantitative easing.
On currency markets, the euro bought $1.2529 in Tokyo morning trade, hardly changed from $1.2527 in London on Wednesday afternoon. Against the Japanese currency, the euro rose to 100.25 yen from 99.97 yen.
The dollar was quoted at 79.99 yen, up from 79.80 yen in London.
On oil markets, New York's main contract, light sweet crude for delivery in August fell 77 cents to $86.89 a barrel while Brent North Sea crude for August delivery added 12 cents to $99.89.
Gold was at 1616.30 an ounce at 0335 GMT, compared with $1,616.50 an ounce late Wednesday.