By Chuck Mikolajczak
NEW YORK (Reuters) - World stock markets edged lower on Thursday, with Wall Street slightly lower and the U.S. dollar modestly weaker after details of a Republican tax plan were released, while sterling dropped after the Bank of England's policy announcement.
The Republican tax plan called for a swath of changes to the U.S. tax code, including slashing the corporate tax rate and reducing the number of tax brackets for individuals.
"There is a lot of hope built into this market right now that is probably a little bit too much optimism based on how the economy is going to grow this year and next," said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.
"So I don’t have a lot of faith in Washington this is going to be the best package, but it will be a package."
Hopes for progress on tax reform and a solid earnings season helped push the S&P 500 up 2.2 percent in October. Apple <AAPL.O>, the largest U.S. company by market capitalization, will report results after the market closes.
According to Thomson Reuters data, of the 384 companies that have reported earnings, 72.7 percent have topped Wall Street expectations compared with a beat rate of 72 percent over the past four quarters. The growth expectation for the quarter is 7.7 percent.
The Dow Jones Industrial Average <.DJI> rose 27.04 points, or 0.12 percent, to 23,462.05, the S&P 500 <.SPX> lost 3.6 points, or 0.14 percent, to 2,575.76 and the Nasdaq Composite <.IXIC> dropped 11.82 points, or 0.18 percent, to 6,704.71.
Housing <.HGX> fell 0.79 percent on the tax plan, which would maintain the deductions for mortgage interest on existing loans and newly purchased homes for up to $500,000.
The dollar fell to its lowest in a week against a basket of major currencies after the tax details were released.
The dollar index <.DXY> fell 0.09 percent, with the euro <EUR=> up 0.33 percent to $1.1655.
Sterling skidded after the Bank of England raised interest rates for the first time in more than 10 years but said it expected only "very gradual" further increases over the next three years.
Sterling dropped 1.1 percent <GBP=> and was on track for its biggest one-day drop since June, and Britain's main FTSE 100 stock index climbed <.FTSE> 0.9 percent.
The rest of Europe retreated from two-year highs hit in the prior session. The pan-European FTSEurofirst 300 index <.FTEU3> lost 0.36 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.05 percent.
Attention will stay on the Fed after it held rates steady on Wednesday and cemented expectations for the third U.S. rate hike of the year in December, with President Donald Trump's expected nomination of Jerome Powell on Thursday to replace Janet Yellen at the Fed's helm.
Powell is a current policymaker and is seen by Fed followers as a Yellen-style pragmatist who will continue with gradual raises to interest rates.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> last rose 8/32 in price to yield 2.3468 percent, from 2.376 percent late on Wednesday.
(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum and Dan Grebler)