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Markets subdued ahead of Fed minutes

Investors look at the stock price monitor at a private securities company in Shanghai, China, Wednesday, Aug. 21, 2013. Asian stock markets were choppy Wednesday as traders waited for hints from the U.S central bank about when it will begin to reduce its massive stimulus effort. (AP Photo)

LONDON (AP) -- Stocks drifted lower Wednesday ahead of the publication of the minutes to the last policy meeting of the U.S. Federal Reserve, which could provide further insights as to when the central bank will start reducing its monetary stimulus.

The Fed is currently buying $85 billion a month in financial assets in order to help keep U.S. interest rates down and spur borrowing and investment. Over recent months, the U.S. economic data has been strong enough to convince Fed officials that a reduction in the stimulus is merited soon.

Forecast-busting U.S. housing figures on Wednesday — showing sales of previously occupied U.S. homes surged 6.5 percent in July — reinforced speculation that the so-called tapering could begin within a month.

"Today was always going to be one of caution," said Alastair McCaig, a market analyst at IG. "To taper or not to taper has been the question on everyone's mind and tonight's minutes could go a long way to answering that question."

In Europe, Germany's DAX closed 0.2 percent lower at 8,285.41 while the CAC-40 in France fell 0.3 percent to 4,015.09. The FTSE 100 index of leading British shares ended 1 percent lower at 6,390.84, underperforming its peers because HSBC PLC has gone ex-dividend.

In the U.S., the Dow Jones industrial average was down 0.4 percent at 14,919 while the broader S&P 500 index fell the same rate to 1,644.

Global markets have been shaky this week as traders worried about a pullback in the Fed's bond purchases. The Dow, for example, has posted a five-day sequence of losses for the first time this year, while U.S. bond yields have risen to their highest levels since 2011. Money has also flowed out of emerging stock markets, denting the currencies and stock markets of countries such as Malaysia, Indonesia and India.

Trading in the currency markets was fairly lackluster ahead of the minutes. The dollar's near-term performance is likely to hinge on when the Fed decides to start tapering its stimulus. The euro was down 0.4 percent at $1.3365 while the dollar rose 0.2 percent to 97.49 yen.

Earlier, Asian stock markets traded unevenly. Japan's Nikkei 225 index ended 0.2 percent higher at 13,424.33 while South Korea's Kospi fell 1.1 percent to 1,867.46. Hong Kong's Hang Seng lost 0.7 percent to 21,817.73.

Indonesia's benchmark index rose 1.1 percent after dropping over 8 percent over the first two days of the week on concerns over the Fed policy.

Oil prices tracked equities lower, with the benchmark New York rate up 4 cents at $105 a barrel.