European shares inched lower today, falling back from more than four-month highs hit in the previous session, with some investors doubtful euro zone policymakers were really any nearer to resolving the region's debt crisis.
European stocks have soared since ECB president Mario Draghi said two weeks ago the central bank was "ready to do whatever it takes" to preserve the euro, raising expectations of bold moves to help lower borrowing costs for debt-laden Spain and Italy.
Since Mr Draghi's comments, the FTSE 100 has gained 6.2 per cent, the DAX has surged 8.8 per cent and the CAC has soared 12 per cent.
But the FTSEurofirst 300 went into retreat on Wednesday, shedding 0.3 per cent to 1,091.13 points by 1141 GMT, having closed up 0.8 per cent at 1,094.19 points yesterday, its highest closing level since March 19.
"We're certainly sceptical about the ability of the authorities to really make big changes in the euro zone landscape," said Richard Batty, strategist at Standard Life Investments.
"I think this is just one of those days where the market is coming more round to a more sceptical view of whether they can achieve what they need to achieve given how poor these economies are, and how difficult it is to make the fiscal and structural adjustments to make them more competitive."
Paul Kavanagh, a partner at Killik & Co, was also cautious.
"Having had quite a strong run-up we're not looking to chase the market too hard in the very near term," he said. "We're long on promise, short on facts at the moment, so in order to make a more considered medium-term view, we need to see more tangible facts around these promises."
Markets remained hopeful that the Bank of England will announce further bond purchases to stimulate the flagging British economy before it finishes its current round of asset buying in November.
The BoE sharply cut its forecast for medium-term economic growth on Wednesday due to worries that factors that have weighed on the British economy since the financial crisis may be more long-lasting than first thought.
Yesterday, Boston Fed Bank president Eric Rosengren said the central bank should launch another bond-buying programme of whatever size and duration is necessary to get the economy back on its feet.
Meanwhile, Fed chairman Ben Bernanke said the US economic recovery was still fragile, and that low interest rates were necessary to promote stronger growth and bring down unemployment.
Standard Chartered clawed back some of its losses, up 8.1 per cent to top the FTSEurofirst 300 leader board, having dived 16.4 per cent today in hefty volume after New York's top bank regulator accused the UK bank of hiding $250 billion in transactions tied to Iran, in violation of US law.
"Expect further volatility - and this may not be the last of it for the banking sector; another skeleton seems to come out of the closet every other week," Manoj Ladwa, head of trading at TJ Markets, said.
The Standard Chartered news came hot on the heels of the Libor interest rate rigging scandal, which has embroiled Barclays and Royal Bank of Scotland among others, and after global peer HSBC apologised over a drug money laundering report by the US Senate.
Standard Chartered went ex-dividend today, limiting some of its gains. Trading volume in Standard Chartered stood at three and a half times its 90-day daily average, compared with the FTSEurofirst 300 at 35 per cent of its 90-day daily average.
Rio Tinto was another solid gainer, ahead 2.8 per cent after the global miner said it would stick to its $16 billion spending plan for the year, even as weaker prices dragged first half profits 34 per cent lower.
Fellow basic resource stocks also advanced, up 1.0 per cent, ahead of a slew of data from top metals consumer China this week which should paint a clearer picture on the extent to which it has been hit by softness in its export markets.
Reuters