London: Stocks and the dollar retrenched on Wednesday amid speculation the Federal Reserve will take a dovish turn in its post-meeting statement later as signs emerge that the greenback’s strength is hurting company profits.

Worries that Greece’s new government is heading for clashes with the rest of the Eurozone over its debts saw European shares stumble for a second day as Greek bonds also took another dive.

Gadget giant Apple had grabbed headlines overnight after it reported the biggest quarterly profits in corporate history, but focus was now squarely on what message the Fed sends when it wraps up its first meeting of the year later.

Wall Street was expected to see a steady start. The dollar slipped against the euro, the yen and a number of other key currencies in early European trading before stabilising.

Scepticism is growing that the Fed will raise rates by midyear, as had been expected. Other major central banks are easing aggressively and the strong dollar and slumping oil prices are driving down inflation.

Big US firms that sell abroad are also grumbling, with a slew multinationals from Microsoft to Procter & Gamble

having warned their situation will get worse if the greenback holds its strength.

“The question at the top of every market participant’s mind is whether the world’s largest central bank will follow its global counterparts into a more dovish policy lean,” said John Kicklighter, chief currency strategist at DailyFX.

Two-year US. Treasury yields — the most sensitive to US

rate hike expectations — held above 0.50 per cent in Europe, having dipped on Tuesday following some weaker-than-expected durable goods data and lacklustre corporate earnings.

European government bonds, with the exception of safe-haven Germany, saw their yields rise again as uncertainty about Greece persists.

Greek Prime Minister Alexis Tsipras named a cabinet of anti-austerity veterans on Tuesday and promptly halted the privatisation of Greece’s biggest port, signalling he intentions to stick to his party’s election pledges.

Shares in Greece’s main banks plunged over 20 per cent. Greek five-year bond yields hit their highest since the country’s 2012 debt restructuring and 10-year yields shot back above 10 per cent.