Spain's IBEX 35 stock index opened flat on Wednesday after rising tentatively over the previous four sessions, at a time when the Chinese stock market rally seems to have come to an end, while traders are awaiting news on the U.S. monetary front.

The Federal Reserve (Fed) will release the minutes of its September monetary policy meeting at 1800 GMT and investors will be watching them closely for clues on the timing of rate easing.

Wall Street's 1% drop on Monday and subsequent 1% rise on Tuesday was a sign of the market tone, according to Bankinter, "zig-zagging and waiting for something to happen and set a trend."

Still, these analysts warned in daily comments on their Telegram channel that caution is warranted in the short term due to the announced Israeli retaliation on Iran: "The question is not if it will happen, but when and in what version: extra-harsh (on nuclear facilities), engagement (on the Revolutionary Guard) or counterproductive (oil facilities)?"

In addition to the Fed minutes, traders will have one eye on Thursday's U.S. inflation data and Friday's producer price index, and another on third-quarter results from U.S. banks JP Morgan, Wells Fargo and Bank of New York due Friday.

Financial markets were also digesting the latest monetary policy news from the eurozone, where more and more voices from the European Central Bank are being heard in anticipation of a rate cut at the October meeting. According to LSEG's IRPR tool, markets estimate the probability of a 25 basis point (bp) cut at 98% and a 50 bp cut at 2%.

Bank of France Governor François Villeroy de Galhau said Wednesday that the October cut was "very likely," and Greek central bank Governor Yannis Stournaras said in an interview published in the Financial Times that he backs two rate cuts this year and expects further easing in 2025.

In the Spanish market, frozen bakery producer Europastry announced on Tuesday that it had canceled its IPO planned for this week citing "deep instability in the markets."

Against this backdrop, at 0705 GMT on Wednesday, Spain's selective IBEX 35 stock market index was down 11.90 points, or 0.10%, to 11,722.80 points, while the FTSE Eurofirst 300 index of large European stocks was up 0.03%.

In the banking sector, Santander lost 0.21%, BBVA fell 0.43%, Caixabank advanced 0.15%, Sabadell fell 0.35%, Bankinter dropped 0.95%, and Unicaja Banco lost 0.37%.

Among the large non-financial stocks, Telefónica gained 0.27%, Inditex fell 0.23%, Iberdrola dropped 0.22%, Cellnex gained 0.39%, and the oil company Repsol lost 1.04%.

(Information by Javi West Larrañaga; edited by Tomás Cobos).