The New York Stock Exchange on June 29, 2022, in New York. Stocks are slipping on Wall Street, Friday, Dec. 9, 2022, after a report showed inflation is still hotter than expected, even though it is slowing. AP
The dollar traded mixed against its main rivals, while oil prices rebounded following sharp falls last week.
Analysts are forecasting the Fed and the European Central Bank to announce smaller rate hikes at their meetings this week compared with recent decisions.
The Bank of England is meanwhile on course for a ninth increase in a row as policymakers try to bring down inflation from the highest levels in decades.
"Following a softer session in Asia, European markets are on edge, opening the week lower ahead of a critical few days for central bank action," noted Victoria Scholar, head of investment at Interactive Investor.
Wall Street opened higher, however, as bargain hunters moved in following losses at the end of last week.
"The ECB, the Fed and the Bank of England are expected to raise rates by 50 basis points each as the pace of tightening looks set to slow," Scholar added.
The half-point jumps will still be steep rises, however, as central banks struggle to cool the pace of price increases, particularly regarding energy and food.
Ahead of the Fed's policy meeting, investors were set to digest US inflation data due Tuesday.
"It will be a fitting hump day on Wednesday, because the (inflation) data and the Fed decision are big humps the market needs to get over if it wants to make a run at a year-end rally," said market analyst Patrick J. O'Hare at Briefing.com.
"If either, or both, disappoint in a meaningful way, then a year-end rally becomes a more challenging proposition," he added.
Traders were keeping an eye also on developments in China as it moves away from the zero-Covid policy that has hammered its economy, the world's second largest after the United States.
The shift comes after widespread protests against the near three-year strategy, though there is concern about the expected spike in infections.
Uncertainty surrounding the strength of China's demand recovery has hit oil prices hard, with crude futures shedding more than 10 percent last week.
"The gradual easing of Chinese Covid restrictions is... expected to lead to a further upswing in demand," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
"However, concerns about the rapid spread of the virus remain, and China will have a tough fight on its hands, dealing with an expected explosion of infections while trying to open up the economy."
Key figures around 1430 GMT
London - FTSE 100: DOWN 0.4 percent at 7,446.42 points
Frankfurt - DAX: DOWN 0.5 percent at 14,301.97
Paris - CAC 40: DOWN 0.5 percent at 6,644.94
EURO STOXX 50: DOWN 0.6 percent at 3,918.42
New York - Dow: UP 0.4 percent at 33,597.24
Tokyo - Nikkei 225: DOWN 0.2 percent at 27,842.33 (close)
Hong Kong - Hang Seng Index: DOWN 2.2 percent at 19,463.63 (close)
Shanghai - Composite: DOWN 0.9 percent at 3,179.04 (close)
Euro/dollar: UP at $1.0559 from $1.0534 on Friday
Dollar/yen: UP at 137.04 yen from 136.57 yen
Pound/dollar: UP at $1.2284 from $1.2262
Euro/pound: UP at 85.96 pence from 85.90 pence
West Texas Intermediate: UP 1.2 percent at $71.88 per barrel
Brent North Sea crude: UP 0.4 percent at $76.37 per barrel