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GLOBAL MARKETS-Stocks fall in light volume ahead of Fed statement

Published 16/03/2016, 08:31 am
© Reuters.  GLOBAL MARKETS-Stocks fall in light volume ahead of Fed statement
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* Materials drag on Europe shares, Wall St weighed by healthcare

* Nikkei futures tumble 1.5 pct

* Oil falls again as oversupply worries resurface (Updates prices, changes comments)

By Rodrigo Campos

NEW YORK, March 15 (Reuters) - Stocks in major markets fell on Tuesday, with Wall Street posting subpar volume for a second straight session, after the Bank of Japan painted a bleaker picture of the world's third-largest economy and U.S. retail sales data lowered expectations of a strong first quarter.

The yen rose against the U.S. dollar, crude oil dropped and emerging market shares fell the most in more than a month.

U.S. retail sales fell less than expected in February, but a sharp downward revision to January's numbers cooled expectations for a strong quarter of growth for the U.S. economy. the Federal Reserve is not expected to remove the prospect of a rate hike in the near future when it ends its two-day meeting on Wednesday.

"The Fed, I believe, is not going to do anything to take tightening out of the equation," said Paul Zemsky, chief investment officer, multi-asset strategies and solutions at Voya Investment Management in New York.

He said first-quarter growth in the United States looks "a bit worse" after the retail sales data. Taken with the recent run-up in stocks and ahead of a Fed statement, that creates an environment for profit-taking.

Healthcare weighed the most on the S&P 500, hurt by a 51 percent drop in shares of Valeant after the Canadian drugmaker slashed its 2016 revenue forecast and said a delay in filing its annual report could mean a debt default. NL3N16N3QY

After trading slightly lower for most of the day, the Dow Jones industrial average .DJI rose 22.4 points, or 0.13 percent, to 17,251.53, while the S&P 500 .SPX lost 3.71 points, or 0.18 percent, to 2,015.93 and the Nasdaq Composite .IXIC dropped 21.61 points, or 0.45 percent, to 4,728.67.

Daily volume on Wall Street was the second-lowest of the year.

The pan-European FTSEurofirst 300 stocks index .FTEU3 ended down 1 percent, dragged lower by commodity-related stocks. The STOXX Europe 600 Basic Resources index .SXPP fell 4.7 percent. Nikkei futures NKc1 dropped 1.5 percent.

MSCI's gauge of stocks in major markets .MIWD00000PUS fell 0.7 percent while emerging market shares .MSCIEF dropped 1.7 percent, the most since Feb. 11.

Brazil's Bovespa .BVSP fell 3.6 percent and the real BRL= slipped 2.8 percent versus the dollar after former President Luiz Inacio Lula da Silva accepted a cabinet position in President Dilma Rousseff's government.

The move could reduce support among lawmakers for Rousseff's ouster while offering Lula some protection from an investigation of alleged money laundering. JUMPS

The yen strengthened after the BOJ removed from its post-meeting statement language used after it cut rates in January that it would lower them further into negative territory if needed. dollar was down 0.6 percent at 113.14 yen JPY= .

"We are obviously in the midst of monetary policy exhaustion," said Tina Byles Williams, chief executive officer and chief investment officer at FIS Group in Philadelphia. "There's anticipation of a risk-off moment and the yen is the protection against that."

The euro EUR= was little changed against the greenback at $1.1107. Sterling GBP= fell 1 percent to $1.4151.

Oil prices dropped further after the Organization of the Petroleum Exporting Countries said it expected lower demand for crude in 2016 than previously thought. inventories rose by 1.5 million barrels in the week to March 11 to 523 million, compared with analysts' expectations for an increase of 3.4 million barrels. Gasoline stockpiles fell by 1.2 million barrels, compared with analysts' expectations for a 2.3 million-barrel decline. crude LCOc1 last traded down 1.6 percent at $38.89 a barrel, further diluting a six-week recovery in oil prices that has helped buoy stock markets. U.S. crude CLc1 lost 1.2 percent to $36.72 in late trading.

"The rally is now retreating on fears that OPEC will continue to flood the market with oil in a world where demand may falter," said Phil Flynn, analyst at the Price Futures Group in Chicago.

U.S. Treasury yields were little changed, with the 10-year note US10YT=RR down 2/32 in price to yield 1.9699 percent.

Spot gold XAU= fell for a third straight session and five of the last six. Copper CMCU3 was up less than 0.1 percent after earlier falling as much as 1.3 percent.

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