Over the past couple of weeks, investors have chased up stocks, the euro and commodities like crude oil on hopes of further economic support from central banks, particularly the U.S. Federal Reserve and the European Central Bank.
As trading volumes sink during the traditional holiday period in the U.S. and Europe, traders' focus turned to China.
"Markets continue to cast around for reasons to extend this current rally, but with policymakers on holiday and economic data thin on the ground, it might prove problematic to keep the current bullish outlook going for much longer," said Ben Critchley, a sales trader at IG Index.
On Thursday, investors will have Chinese inflation, factory output and retail sales data to digest. Analysts expect inflation to fall further, which would give authorities in Beijing room to shore up slowing growth by easing credit without fear of igniting a spike in consumer prices.
"Traders seem largely content to sit on their hands right now, at least until we see that array of data released from China," said Fawad Razaqzada, market strategist at GFT Markets.
In Europe, Germany's DAX lost 0.6 percent to 6,923 while France's CAC-40 was 0.6 percent lower at 3,433. Britain's FTSE 100 fell 0.5 percent to 5,812 after the Bank of England cut its growth and inflation forecasts. That has confirmed many economists' expectations that the Bank of England will provide more monetary stimulus later this year.
Many of Europe's indexes have hit multi-month highs on hopes the European Central Bank will soon unveil a new anti-crisis strategy. Those hopes have helped ease the bond market pressure on Italy and Spain. The latter has seen its benchmark ten-year bond yield settle below the 7 percent threshold considered unsustainable in the long run.
The euro has also clambered off its recent two-year low against the dollar of around $1.18. In line with the general market mood Wednesday, Europe's single currency was down 0.2 percent at $1.2363.
Wall Street also appeared headed for a lower opening, with Dow futures and the broader S&P 500 futures down 0.3 percent. On Tuesday, the S&P index closed above the 1,400 level for the first time since early May, a clear illustration of the upbeat mood in markets despite ongoing worries over Europe's debt crisis and patchy economic data out of the U.S.
Earlier in Asia, most markets ended higher. Japan's Nikkei 225 index rose 0.9 percent to 8,881.16. South Korea's Kospi added 0.9 percent to 1,903.23 as sentiment improved a day ahead of a Bank of Korea meeting where policy makers are expected to lower interest rates to stimulate the economy. And China's main index in Shanghai rose 0.2 percent at 2,160.99.
But Hong Kong's Hang Seng index fell marginally to 20,065.52 as investors became cautious ahead of the release of the key economic data in China.
Oil prices gave up some recent gains, with benchmark crude for September delivery down 67 cents at $93.01 a barrel in electronic trading on the New York Mercantile Exchange.