Global stocks, dollar dip as Fed to start meeting

Tue Sep 17, 2013 4:07am EDT
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By Blaise Robinson

PARIS (Reuters) - Shares dipped and the dollar lost ground on Tuesday as investors consolidated positions before a U.S. Federal policy meeting at which the central bank is set to start scaling back stimulus.

German Bunds also edged lower, with the 10-year yields rising 1 basis point to 1.888 percent.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.3 percent in early trade, retreating from a five-year high hit in the previous session.

In Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.3 percent, while Japan's Nikkei stock average .N225, which opened higher after a holiday on Monday, changed gears and closed 0.7 percent lower.

The Fed's Open Market Committee begins its two-day meeting on Tuesday, and despite a lacklustre August U.S. jobs report, it is expected to trim its monthly asset purchases by about $10 billion from $85 billion.

"The start of the Fed's tapering has been priced in already, and investors now realise that lowering stimulus measures means that the U.S. economic recovery is gaining traction," said David Thebault, head of quantitative sales trading, at Global Equities in Paris.

"Now the question is: how big will be the first reduction in the programme? Investors are pricing in $10 billion, but $20 billion or above could create waves, so people remain cautious ahead of the decision."

The dollar was lower versus a basket of currencies .DXY, at 81.193, after having set a four-week low of 80.968 the previous day.   Continued...

A visitor walks past logos at the Tokyo Stock Exchange in Tokyo June 13, 2013. REUTERS/Toru Hanai