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 Stocks fell and core bonds rose, but the scale of the moves
reflected caution rather than significant concern, economists said.
The pan-European FTSEurofirst 300 index, which had risen 2.6 percent
on Tuesday, fell 0.7 percent while the euro zone's blue-chip Euro
STOXX 50 index declined by 0.8 percent.
German Bund yields fell 2 basis points to 0.51 percent, hitting
their lowest in two weeks.
The dollar was just off 7-month highs against a basket of
currencies, as minutes from the latest Federal Reserve policy
meeting were expected to underpin expectations of an interest rate
hike in December.
The dollar strength hit commodities, with London copper falling
towards new six-year lows [MET/L].
Friday night's attacks in the French capital, claimed by Islamic
State, triggered security alerts around the world, with an
international soccer match called off in Germany and two Air France
flights from the United States diverted. The planes were later
declared safe.
 In Paris, gunfire and explosions shook the suburb of St Denis early
on Wednesday as police surrounded a building where a Belgian
suspected of masterminding the attacks was believed to be holed up.
The European Central Bank is expected to supercharge monetary policy
easing next month, a prospect the attacks have made even more
likely.
The bank's chief economist Peter Praet said on Tuesday that such
events hurt confidence while executive board member Yves Mersch said
on Wednesday that "doom and gloom" talk was at this stage not
warranted.
"There's absolutely no reason not to expect the ECB to ease next
month and we've had further falls in commodity prices that adds to
the subdued inflation outlook," said Chris Scicluna, head of
economic research at Daiwa Capital Markets in London.
"The events in Paris compound that and compound the weaknesses in
the euro area."
FED MINUTES
The dollar index was lower at 99.501 after touching 99.745 on
Tuesday, its highest since mid April. It has risen 6.3 percent in
the past month as market odds for a U.S. interest rate hike in
December moved from around 30 percent to 66 percent.
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This week's data further cemented rate hike expectations. Monthly
U.S. consumer prices increased in October after two straight months
of declines, putting annual core inflation at 1.9 percent.
Industrial output fell short of market expectations but output in
the manufacturing sector posted a solid increase.
"It will be a case of range-trading going into the Fed minutes. We
could see some positions being pared, with the dollar having risen
in the past few weeks," said Jeremy Stretch, head of currency
strategy at CIBC World Markets.
The dollar's dip saw the euro regain ground. It rose to $1.0670,
having dropped to a seven-month low of $1.0630 on Tuesday.
Gold hit a 5-1/2-year low of $1,064.95 per ounce overnight as the
strong dollar offset its traditional safe-haven appeal. In Europe,
it was up 0.07 percent on the day at $1,071.4 an ounce. [GOL/]
Oil prices rose following reports of falling stockpiles and rising
refinery activity, though they remained not far from 6-1/2-year lows
hit in August on persistent concerns about a global supply glut.
U.S. crude futures were up almost half a dollar to $41.13 a barrel,
while Brent crude futures traded at $44.13 per barrel.
(Additional reporting by Dhara Ranasinghe; editing by John
Stonestreet)
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