"In a week focused on central bank action, the Bank of England is expected to... (also announce) another rate hike on Thursday, lifting rates to the highest level since 2009," noted Victoria Scholar, head of investment at Interactive Investor.
On Tuesday, the Reserve Bank of Australia lifted interest rates 25 basis points, the first hike since 2010 and by more than expected. Officials also indicated further increases were in the pipeline.
The move sent the Australian dollar briefly rallying more than one percent against the greenback before settling back slightly.
In Europe, eurozone stock markets recovered slightly in afternoon deals following sharp losses Monday.
London fell after a long holiday weekend, with investors catching up with losses elsewhere on Monday.
Traders continued to pore over earnings results from some of the world's biggest companies.
British energy giant BP on Tuesday said its decision to pull out of Russia as a result of the war in Ukraine pushed it deep into the red in the first three months of this year.
But its underlying performance was strong thanks to a recent surge in oil and gas prices.
On Tuesday, crude futures declined ahead of a regular meeting this week of OPEC+.
The body comprising the Organization of Petroleum Exporting Countries plus Russia and other oil-producing nations must decide on output policy amid tight supply fears triggered by the Ukraine war.
Key figures at around 1130 GMT
London - FTSE 100: DOWN 0.8 per cent at 7,482.07 points
Frankfurt - DAX: FLAT at 13,941.15
Paris - CAC 40: UP 0.1 per cent at 6,428.93
EURO STOXX 50: DOWN 0.1 per cent at 3,729.03
Hong Kong - Hang Seng Index: UP 0.1 per cent at 21,101.89 (close)
Tokyo - Nikkei 225: Closed for a holiday
Shanghai - Composite: Closed for a holiday
New York - Dow: UP 0.3 per cent at 33,061.50 (close)
Euro/dollar: DOWN at $1.0503 from $1.0506 on Monday
Pound/dollar: UP at $1.2500 from $1.2489
Euro/pound: DOWN at 84.02 pence from 84.09 pence
Dollar/yen: DOWN at 130.08 yen from 130.16 yen
Brent North Sea crude: DOWN 1.3 per cent at $106.23 per barrel
West Texas Intermediate: DOWN 1.5 per cent at $103.63 per barrel