European Shares Seen Mixed As Fed Sounds Less Hawkish Than Feared

European stocks are likely to open mixed on Thursday as traders return from the May Day holiday.

The downside, if any, may remain limited after the U.S. Federal Reserve sounded less hawkish than many had feared.

Fed Chair Jerome Powell signaled potential rate cuts but warned of high inflation and uncertain path forward.

Asian stocks recovered some ground after a weak start, with Hong Kong's Hang Seng rallying over 2 percent following Beijing's recent efforts to prop up stocks.

The yen slid against the dollar, reversing direction after a sudden surge against the dollar overnight due to possible intervention by Japanese authorities.

Gold traded slightly lower above $2,300 per ounce while oil prices stabilized after tumbling to hit a seven-week low Wednesday on data showing a surge in U.S. stockpiles and signs of easing political tensions in the Middle East as truce talks continue.

In economic releases, euro area PMI data may garner investor attention later in the day.

Across the Atlantic, trading may be swayed by reaction to reports on weekly jobless claims, trade balance, labor productivity and costs.

U.S. stocks fluctuated before closing slightly higher overnight after the Fed held rates steady and cited lack of progress on inflation to cut interest rates from a two-decade high.

The U.S. central bank also announced that it would shrink its balance sheet at a slower pace to ease strains in money markets.

On the data front, private payrolls increased at a faster than expected pace in April, while factory activity contracted in the month on declining demand, separate reports revealed.

While the Dow inched up 0.2 percent, the tech-heavy Nasdaq Composite and the S&P 500 both dipped around 0.3 percent.

Most European markets were closed on Wednesday for May Day. The U.K.'s FTSE 100 dropped 0.3 percent.

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