NEW YORK (Reuters) - Stocks in major markets fell on Monday and oil prices fell as investors positioned for a Federal Reserve meeting this week that could see the U.S. central bank raise interest rates for the first time in nearly a decade.
Further weighing on risk assets, growth in China's investment and factory output missed forecasts in August, adding to softer data that raised the chances that economic growth may dip below 7 percent in the third quarter and for the first time since the global financial crisis.
The U.S. dollar closed little changed after hitting a near three-week low against a basket of major currencies, with investors squarely fixed on whether interest rates would be kept at their record lows until at least December.
Wall Street fell with commodity-related sectors weighing the most. The only S&P 500 industry sector in the black was utilities .SPLRCU, which is often bid when government bond yields seem unattractively low.
The combination of worries about slowing Chinese and global growth and the prospect of higher U.S. borrowing costs have weighed on markets for weeks, although concern about the potential impact on economic health has many in markets thinking the Fed won't begin to tighten just yet.
However, others expect the Fed to raise rates as a confirmation that the U.S. economy is in a strong enough position to not warrant emergency measures from the central bank.
"Because of the volatility in the market and the conflicting data points on the U.S. economy it is really difficult to get a firm handle on what the Fed's likely to do," said David Spika, global investment strategist for the GuideStone Funds in Dallas.
The Dow Jones industrial average .DJI fell 62.13 points, or 0.38 percent, to 16,370.96, the S&P 500 .SPX lost 8.02 points, or 0.41 percent, to 1,953.03 and the Nasdaq Composite .IXIC dropped 16.58 points, or 0.34 percent, to 4,805.76.
Volume on Wall Street was the lowest in nearly a month.
The FTSEurofirst 300 .FTEU3 index of top European shares finished 0.5 percent lower and a broad gauge of stocks across the world .MIWD00000PUS was down 0.3 percent.
The U.S. dollar hit an almost three-week low against a basket of currencies .DXY before rebounding to stay little changed from Friday's session.
The greenback dipped 0.3 percent against the yen JPY=, which last traded at 120.17 to the dollar. The euro EUR= was down 0.2 percent at $1.13152.
U.S. 30-year Treasury bonds US30YT=RR lost initial gains in price and were last down 8/32 to yield 2.956 percent, from a yield of 2.944 percent late on Friday. Benchmark 10-year Treasury notes US10YT=RR were little changed in price to yield 2.185 percent, from 2.183 percent late Friday.
"This is probably one of the most anticipated meetings of the Fed, and people don’t know where to go, and the messages from the Fed have been very ambiguous," said Robbert van Batenburg, director of flow strategy at Societe Generale.
Brent crude oil LCOc1 fell 3.5 percent to $46.47 a barrel and U.S. crude CLc1 dropped 1.1 percent to $44.12, dragged down by a tumble in gasoline prices, although data indicating the biggest draw since June at the delivery point for U.S. crude tempered some losses.
Gasoline futures RBc1 slumped 4.7 percent.
Copper fell on worries over demand from China and caution ahead of the Fed meeting. Three-month copper CMCU3 slipped 1.1 percent to $5,309.15 a tonne.
Gold XAU= ticked up less than 0.1 percent to $1,108.55 an ounce.
Additional reporting by Sinead Carew, Sam Forgione, Richard Leong and Barani Krishnan; Editing by Nick Zieminski and James Dalgleish