LONDON/HONG KONG – World stocks fell from the previous session’s record highs and European stocks dropped on Wednesday on caution over the pace of economic recovery, while the dollar hit one-week highs as investors reduced exposure to riskier assets.

Accommodative central bank policies and optimism about reopening economies have pushed world stocks to record highs, but concerns are growing about the impact of rising coronavirus infections due to the Delta variant.

Markets are also still assessing data from last week which showed the US economy created the fewest jobs in seven months in August.

The Fed should move forward with a plan to taper its massive asset purchase programme despite the slowdown in job growth, St Louis Federal Reserve Bank President James Bullard said in an interview with the Financial Times on Wednesday.

“Everything is tapering, tapering, tapering. We are looking at every single central bank – when is the next one?” said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: “the Delta variant impact is still running like a wild card”.

MSCI’s world equity index fell 0.24 percent after seven consecutive days of gains.

European stocks fell more than 1 percent to their lowest in nearly three weeks. Britain’s FTSE 100 dropped 0.85 percent to two-week lows.

S&P futures fell 0.34 percent after the S&P 500 lost 0.34 percent overnight. The Nasdaq Composite hit record highs as investors favoured Big Tech stocks, which have performed well during the pandemic.

“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

In Europe, markets are focused on whether the European Central Bank will this week begin to scale back its bond purchase programme.

The dollar hit a one-week high against the single currency and against an index of currencies, recovering from recent five-week lows.

Yields on 10-year Treasury notes fell to 1.3529 percent compared to a US close of 1.371 percent on Tuesday, retreating from this week’s eight-week highs. Germany’s 10-year Bund yield edged lower to -0.329 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.68 percent, having stretched its gains in the past eight sessions.

Australia slipped 0.24 percent, Hong Kong shed 0.45 percent and the Chinese mainland’s blue chips dropped 0.41 percent, also weighed down by recent soft data in the world’s second-biggest economy.

Bucking the regional trend, Japan’s Nikkei gained 0.89 percent to a five-month high, helped by revised gross domestic product growth figures beating expectations.

Bitcoin paused for breath after plunging 17 percent on Monday to a low of around US$43,000 before recovering. It was last at US$45,170, down 3.67 percent.

US crude oil rose 0.42 percent to US$68.64 a barrel and Brent crude gained 0.33 percent to US$71.92 per barrel, with prices supported by a slow production restart in the US Gulf of Mexico after Hurricane Ida hit the region.

Gold gained 0.21 percent to US$1797.25 per ounce in line with the risk-averse mood and just below the psychologically key US$1,800 level which it fell through in the previous session.