LONDON, ENGLAND - MARCH 16: Bank of England Governor Andrew Bailey poses for a photograph on the first day of his new role at the central bank on March 16, 2020 in London, England. (Photo by Tolga Akmen - WPA Pool/Getty Images)
European stocks edged higher on Thursday, as investors awaited a monetary policy decision from the Bank of England.
Markets are poised for updates on the central bank's thinking on negative interest rates, though policymakers are expected to leave benchmark interest rates and quantitative easing levels unchanged.
The FTSE (^FTSE) was trading 0.2% higher in London, and the Germany's DAX (^GDAXI) was also 0.2% higher. France's CAC 40 (^FCHI) rose 0.3%.
It came in spite of declines for most Asian stock indices overnight. Short-term interest rates rose in China, raising concerns over an apparent shift to monetary tightening.
The liquidity squeeze by the People's Bank of China comes despite greater demand for cash ahead of the Lunar New Year holiday, with policymakers thought to be seeking to cool property and stock market growth.
Japan's Nikkei (^N225) was off 1.1% and the Kospi (^KS11) in South Korea lost 1.4%.
Hong Kong's Hang Seng Index (^HSI) lost 0.7%, and the Shanghai Composite Index (000001.SS) was down 0.4%.
READ MORE: What a new post-Brexit state aid regime means for the UK
"Following a solid start to the week, the global rally in risk assets showed some dwindling signs in Asia. However, there is still a very positive pro-cyclical vibe under the hood, which coincided with steepening US yield curves as Energy and Bank stocks surged," said Stephen Innes, chief global market strategist at Axi.
There are also concerns over China-US relations. "Weighing on sentiment a touch are hawkish comments from the US Commerce Secretary nominee Gina Raimondo on restricted Chinese companies," wrote Deutsche Bank analysts in a note.
"She said that she knows of "no reason" why Huawei, ZTE and other Chinese companies shouldn't remain on a restricted trade list, thus suggesting that the new administration will likely continue with a hard-line stance on China."
Meanwhile US futures looked set to open close to flat as the rally at the start of the week started to fade. S&P 500 futures (ES=F) were flat after a third straight day of gains on Wednesday, ending the last session just 0.7% short of record highs.
READ MORE: Negative rates in focus as Bank of England updates the market
Dow Jones futures (YM=F) were down 0.1% as European markets opened, while futures on the Nasdaq (NQ=F) rose 0.2%.
The US Labor Department's weekly initial jobless claims report is expected to show another 830,000 Americans filed for first-time unemployment benefits last week.
WATCH: What are negative interest rates?