EG: Investors Cautious Ahead of Fed Meeting -- 2nd Update
By Chiara Albanese
Global stocks were little changed overall Monday ahead of a closely watched meeting of the U.S. Federal Reserve later in the week.
European shares gave up early gains as investors cautiously awaited Wednesday's Fed meeting, when officials will consider raising interest rates for the first time in nearly a decade.
The Stoxx Europe 600 was marginally lower early afternoon. U.S. stock futures indicated a 0.2% opening gain for the S&P 500, and a rise of 0.1% for the Dow Jones Industrial Average. Changes in futures aren't necessarily reflected in market moves after the opening bell.
"It's been a sedate start to the week for European markets after the recent weeks' turbulence mainly because everyone is waiting to see what happens on Thursday," said Tommy Ricketts, European equity strategist at Bank of America Merrill Lynch in London.
He said that trading volume was light as investors are wary of making significant bets.
Earlier, Chinese stocks suffered fresh losses after the release of another batch of disappointing economic data from the world's second-largest economy, with the Shanghai Composite Index closing 2.7% lower. Analysts suspect Beijing propped up the market, as an index of Shanghai's largest 50 stocks, mostly state-owned enterprises, was up 1.5%.
Two economic reports on Sunday--factory output and fixed-asset investment--fell short of expectations. This added to concerns that the country could struggle to reach its full-year growth target of 7%.
"China will remain a major source of volatility. Today's sharp fall in the Shanghai Composite Index was a reminder that Chinese stocks are not out of the woods just yet," said London-based Rabobank analyst Piotr Matys.
Uncertainty over the impact that an increase in U.S. rates would have on riskier assets has led to a burst of volatility in global markets in recent weeks.
But that eased at the end of last week as investors became more confident the Fed is unlikely to raise its short-term rates as early as this week.
About 46% of economists surveyed by The Wall Street Journal in September expect the Fed to raise rates this week, compared with 82% in an August survey.
"Interest rate expectations [have been] pushed out once again, allowing global equity markets to rebound. We see something of the same occurring today," said Guy Monson, chief investment officer at London-based asset manager Sarasin & Partners LLP, which manages GBP13.8 billion ($21.3 billion).
Mr. Monson still expects the Fed to raise interest rates this year, but sees December's meeting as the most likely time for the announcement.
The euro was flat against the dollar, trading around $1.1317.
The Turkish lira fell to a fresh record low against the dollar at 3.0686, hit by political uncertainties ahead of elections in the country in November.
"The drop in Turkish-lira-denominated assets may gain steam," said Sertan Kargin, chief economist at Eczacibasi Securities in Istanbul.
Brent crude oil was down 0.6% at $49.59 a barrel on the November contract on the Intercontinental Exchange, while gold was 0.2% higher at $1,105.60 an ounce.
Write to Chiara Albanese at chiara.albanese@wsj.com
