LONDON - European and US stocks moved lower Wednesday before top-level talks between the United States and the European Union on resolving a simmering trade dispute that has left investors on edge.

The dollar dropped against the euro, while bitcoin briefly broke through $8,300 before slipping back.

Oil prices rose following a report by the American Petroleum Institute showing a decline in US crude inventories.

European Commission President Jean-Claude Juncker was heading to Washington on Wednesday to meet US President Donald Trump in an attempt to avert an escalation of tariffs.

"With escalating trade tensions between the European Union and the United States still a key theme that continues to weigh on global sentiment, the outcome of today's meeting could leave a lasting impact on the markets," noted analyst Lukman Otunuga at traders FXTM.

"Market players should be prepared to expect the unexpected from the talks, especially when considering how highly unpredictable the Trump administration can be."

In addition to slapping hefty import taxes on steel and aluminium from the EU, Canada and Mexico, Trump has imposed 25 percent tariffs on $34 billion of Chinese products, drawing a retaliatory response from Beijing. Washington has since threatened tariffs on another $200 billion of Chinese goods and Trump then upped that to $500 billion, the equivalent of a full-year's imports from China.

Beijing on Monday signalled that it would shift to a looser fiscal policy in a bid to protect the world's second largest economy from the impact of the row.

The announcement sent Shanghai's main stock index up 1.6 percent on Tuesday, while the yuan hit a 13-month low versus the US dollar.

'Not optimistic'

In what appeared to be the first acknowledgement that Trump's aggressive trade strategy was hurting ordinary Americans, the US government on Tuesday announced $12 billion in aid for farmers who have been the main target of retaliatory measures.

But the US leader showed no sign of backing down on his approach, tweeting: "Tariffs are the greatest!" Juncker said he was "not very optimistic" about the outcome of his talks with Trump. "I know Mr Trump pretty well. I have met him frequently and know how to deal with him and know how he deals with others. We will negotiate as equals," Juncker told German public broadcaster ZDF.

Fiat skids lower

Shares in Fiat-Chrysler plunged more than 10 percent in Milan trading after the automaker surprised the markets with a drop in net profits, although for the first time it had generated positive cash flow.

The results were published shortly after it was announced that Sergio Marchionne, who helped turn around Fiat and merged it with US carmaker Chrysler, had died.

The 66-year-old stepped down at the weekend following complications from surgery.

The carmaker's shares opened around 9.5 percent lower on Wall Street and were down a similar amount in afternoon trading in Milan.