The euro and sterling slipped on Thursday ahead of expected rate cuts in Europe and the UK, while most Asian stock markets gave up early gains on disappointment that China did not announce new stimulus plans.

European shares were set to drop as well following a rally in markets worldwide on Wednesday sparked by speculation that China was about to announce more stimulus spending, adding to a 4 trillion yuan ($585 million) plan unveiled in November.

Gloomy economic news continued to push some investors to perceived havens such as gold, while oil prices eased after a near 9 percent rally overnight spurred by an unexpected drop in U.S. crude oil inventories.

The European Central Bank was expected to cut interest rates to an all-time low later in the day and slash its 2009 and 2010 economic forecasts to reflect the rapid pace of deterioration in the euro zone.

The Bank of England also looked set to cut interest rates, and was expected to announce it will start boosting money supply to drag Britain out of recession.

The European single currency fell 0.6 percent from late U.S. trade to $1.2588 ahead of the ECB decision, which is expected at 7:45 a.m. EST, and slipped 0.4 percent against the yen to 125.00 yen.

Sterling fell 0.4 percent to $1.4140. The BoE's rate decision is expected at around 7 a.m. EST.

The MSCI index for Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> was down 0.1 percent as of 2:30 a.m. EST, after gaining about 2 percent over the previous two sessions.

China's Premier Wen Jiabao vowed to parliament on Thursday that the government would ramp up spending to hit its 8 percent growth target this year, but did not announce the more concrete spending messages that markets had craved for.

They certainly didn't announce the stimulus package that everyone was looking for, said Juliette Saly, market analyst at Commonwealth Securities in Australia.

The encouraging news though is that they are saying they will increase spending so that should counter the economic slowdown. Saly added.

Shanghai stocks <.SSEC>, which had surged 6.1 percent on Wednesday on hopes of more government stimulus, ended up 1 percent on Thursday but off the day's highs, while Taiwan rose 2.1 percent and Hong Kong's Hang Seng <.HSI> fell 0.8 percent.

But Japan's Nikkei average <.N225> surged 2 percent on hopes that tentative signs of a rebound in China would boost earnings for exporters of construction machines and shipping firms.

Regardless of China's policy path, investors' nerves remain frayed by the volatile mix of a weakening global economy and doubts about the stability of the financial system.

Reports on Wednesday showed U.S. employers cut nearly 700,000 jobs in February and the U.S. service sector slump deepened.

Elsewhere, Japanese firms' capital spending tumbled 17.3 percent in October-December from the same period a year earlier, while the euro zone's dominant service sector sank still deeper into recession during February.

FOCUS ON ECB, BOE

With the ECB widely tipped to cut interest rates by half a percentage point to 1.5 percent, investors will be looking for clues on where the central bank's rate floor lies, as euro zone policy makers seem reluctant to follow the U.S. Federal Reserve and the Bank of Japan in going toward zero.

The BoE is also expected to cut interest rates by half a percentage point to a record low of 0.5 percent.

Against the yen, the dollar rose 0.3 percent to 99.54, its highest in four months, before settling back at 99.41.

In commodity markets, oil prices lost 40 cents to $44.98 a barrel, paring a near 9 percent rally in the prior session that had been spurred by an unexpected drop in U.S. crude stocks and an increase in gasoline demand.

Though some assets seen as safer in volatile times have ceded ground recently, investors have yet to exit these positions in big numbers as gloomy economic news continues to flood in.

Spot gold gained about $6 to $912.60 an ounce, recovering after prices for the precious metal had fallen in the eight previous sessions to hit a three-week low on Wednesday.

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