Global share rally pauses, dollar firms ahead of Fed
By Richard Hubbard
LONDON (Reuters) - A rally in world equities and gold paused on Tuesday while the dollar inched up as investors positioned for widely expected confirmation from the U.S. Federal Reserve that it is sticking with its monetary stimulus.
Although markets are wary of potential surprises when the Fed presents the outcome of a two-day meeting on Wednesday, a rally in riskier assets over the past week and a dollar selloff is seen as having largely factored in an unchanged policy.
The pan-European FTSEurofirst 300 index .FTEU3 hit a 5-year high last week as investors welcomed the expected delay in Fed tapering. The index edged down 0.1 percent on Tuesday as attention turned to what has so far been a mixed earnings season in Europe.
Markets expect the Fed to extend its $85 billion monthly bond buying scheme into next year while it assesses the impact of this month's government shutdown on growth.
"People are more sanguine about the event risk from the Fed, and I think quite a few investors are comfortable with the fact that a Fed move could be delayed until March," Dennis Jose, European equity strategist at Barclays Capital, said.
The European share market dip followed a softer session in Asia where MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost about 0.3 percent and Japan's Nikkei stock average .N225 gave up 0.5 percent.
MSCI's world equity index .MIWD00000PUS, tracking shares in 45 countries, ended four days of gains to trade virtually.
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