By Medha Singh and Lisa Pauline Mattackal
(Reuters) - European shares were a bit lower on Wednesday as investors intently waited for a pivotal British election on Thursday to decide the fate of Brexit, with attention also focused on central bank meetings in the United States and euro zone this week.
The pan-European STOXX 600 index (STOXX) ticked down 0.2% in volatile trading.
Britain's domestically-focused mid-cap stocks index (FTMC) fell 0.6%, as a carefully monitored indicator now predicted only a modest majority for Prime Minister Boris Johnson.
If Johnson fails to win an outright majority, the outcome would prolong Brexit uncertainty and further hit investor sentiment.
"European markets do remain cheap, versus history or other markets," said Chris Bailey, European strategist at Raymond James. "Investors are still underweight, mostly in UK assets. I think that will close up after the election and when we have a bit more clarity on Brexit."
The benchmark European index scaled four-year peaks in the past two months on optimism around an eventual departure for Britain from the European Union as well as hopes of a resolution to the U.S.-China trade war, but sentiment has lately been dampened by conflicting headlines on both.
The trade-sensitive German index (GDAXI) has turned negative in December after rising for three months in a row as a Sino-U.S. trade deal remains elusive ahead of the next round of U.S. tariffs on Chinese imports due on Dec. 15.
While the latest reports suggest tariffs would be postponed, it could take until 2020 before both sides can agree on an initial trade deal.
Germany's export heavy DAX was flat after earlier rising as much as 0.6%, while trade-sensitive autos (SXAP) and miners (SXPP) were among the few advancers of the day.
The spotlight will shine on the U.S. Federal Reserve policy meeting later on Wednesday, where the central bank is expected to keep rates unchanged after trimming them three times this year. The first policy meeting led by new European Central Bank President Christine Lagarde on Thursday will also be closely watched.
Britain's biggest sportswear retailer JD Sports (L:JD) fell 9.1%, heading for its worst day in more than three years after its largest shareholder, Pentland, sold a part of its stake.
Telecom stocks (SXKP) were pressured by a more than 2.3% drop in Telefonica (MC:TEF) Deutschland (DE:O2Dn) after one of Germany's three main mobile operators cut its dividend.
In a bright spot, Zara fashion chain owner Inditex (MC:ITX) rose about 1% after it forecast full-year like-for-like sales growth of 4% to 6%.