By Richard Hubbard
LONDON (Reuters) - Shares, the euro and German bonds were barely changed on Wednesday as investors turned cautious before this week's policy decisions by the Bank of Japan and European Central Bank, along with monthly U.S. jobs data.
On Thursday the ECB is forecast to leave interest rates unchanged but expectations are high that Japan's central bank will announce a forceful monetary easing to try to boost its recession-bound economy.
America's nonfarm payrolls report on Friday is likely to confirm market views that the Federal Reserve will maintain its extremely accommodative monetary policy, which has underpinned investor sentiment all year.
"People ... are keeping their positions quite tight ahead of central bank meetings and data later this week," Ioan Smith, strategist at Knight Capital, said. "Even though the chances of a surprise may be small, you don't want to be caught the wrong way if there is one."
Before these events European equity markets were taking a breather after posting strong gains on Tuesday. The FTSE Eurofirst 300 index of top European shares was just 0.1 percent lower (.FTEU3) by mid-morning, consolidating its 1.3 percent gain made in the previous session.
London's FTSE 100 (.FTSE), Paris's CAC-40 (.FCHI) and Frankfurt's DAX (.GDAXI) traded around 0.2 percent lower, giving back a little of Tuesday's strong gains. (.L)(.EU)
Steady U.S. stock futures pointed to a lackluster Wall Street open after the Standard & Poor's 500 Index (.SPX) neared its all-time high the previous session.
Japan's Nikkei average was the stand out performer, soaring 3 percent (.N225) as the expectations of easier policy from new BoJ Governor Haruhiko Kuroda encouraged demand for export-oriented firms.
Some investors have warned about expecting further strong gains after the first quarter when many major market indexes reached record or near-record highs, propelled by the loose policies of global central banks.
"I'd be skeptical about continuing the stronger momentum that we saw in the first quarter just because it very rarely happens you get two such strong quarters in a row," said Tom Elliott, global strategist at JP Morgan Asset Management. "I think what we'll be seeing is probably investors over the next three months looking for any slight excuse to take profits."
In the first quarter the benchmark U.S. S&P 500 index (.SPX) rose 10 percent to a record high, while MSCI's broad world equity index <.miwd00000pus> gained almost six percent.
The MSCI All World Country World index, which covers over 9,000 shares in 45 countries, was flat on Wednesday at 358.7 points but is hovering around levels last seen in 2008.
In the debt market German government bond futures eased slightly after Germany successfully sold 3.28 billion euros ($4.1 billion) of new five-year bonds, which attracted demand from investors still fretting about Cyprus's messy bailout experience.
The euro slipped 0.1 percent to $1.2806, staying near a four-month low of $1.2750 set last week as the currency remained pressured by the concerns about Cyprus and weak euro zone economies.
Against the yen, the dollar was close to flat at 93.43 yen, holding above a one-month low of 92.57 yen set on Tuesday.
"The story of the day is the market will be reluctant to do anything because it's scared of being caught wrongfooted by what comes out of Japan... and the ECB meeting tomorrow," said Daragh Maher, FX strategist at HSBC.
In commodity markets, gold fell for a second day to a one-month low of $1,563.06 an ounce, approaching the 2013 nadir hit on February 21 of $1,554.49, which was a six-month low.
"There is a lack of interest in gold right now and everybody seems to be sitting on the sidelines. Stocks are still looking more attractive for investors than gold," said Yuichi Ikemizu, branch manager at Standard Bank in Tokyo
Copper hit its lowest level in more than seven months for a second session on Wednesday, on worries about weak global demand and as speculators stepped up selling before a two-day holiday in China.
Three-month copper on the London Metal Exchange CMCU3 fell by 0.57 percent to $7,422.75 a tonne have earlier touched $7,404.50 a tonne, the lowest price since August 20.
Weak demand worries also hit oil with U.S. crude futures falling 0.6 percent to $96.61 a barrel while Brent eased 0.35 percent to $110.30. (O/R) ($1 = 0.7789 euros)
(Additional reporting by Alistair Smout and Nia Williams; editing by David Stamp)