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GLOBAL MARKETS-Stocks give up gains as Fed concerns weigh

Published 14/09/2015, 10:34 pm
© Reuters.  GLOBAL MARKETS-Stocks give up gains as Fed concerns weigh
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* European stocks give up gains on caution before Fed meeting

* Wall Street set to open lower

* Dollar lifts off near three-week low vs basket

* Oil falls on prospect of weaker demand

By Nigel Stephenson

LONDON, Sept 14 (Reuters) - European shares gave up the day's gains on Monday, the dollar stalled and oil prices fell as investors positioned for a U.S. Federal Reserve meeting later this week that could see interest rates rise for the first time since 2006.

Tepid Chinese economic data was largely shrugged off and stocks rose as much as 1 percent in early European trade, but the momentum gradually faded.

Wall Street looked set to open lower, according to index futures ESc1 .

The combination of worries about slowing Chinese and global growth and higher U.S. borrowing costs have weighed on markets for weeks, although concern about the potential impact on economic health means many economists see no "liftoff" in U.S. interest rates until next year.

A Reuters poll on Friday showed a small majority of forecasters still expect a Fed hike on Thursday, though markets-based models suggest policy tightening will be delayed. ID:nL1N11H1B3

The pan-European FTSEurofirst 300 index .FTEU3 , which earlier gained almost 1 percent, was last down 0.2 percent for the day.

Earlier, data showed growth in Chinese investment and factory output in August lagged forecasts. After weak trade and inflation data last week, this made it more likely that third-quarter economic growth may dip below 7 percent for the first time since the financial crisis. Only retail sales beat forecasts. ID:nL4N11J0A9

Shares fell in China and Japan, although MSCI's main index of Asia-Pacific stocks excluding Japan .MIAPJ0000PUS rose 0.6 percent.

China's Shanghai Composite index .SSEC dropped 2.8 percent and the CSI 300 .CSI300 index of the biggest listed companies in Shanghai and Shenzhen lost 2 percent. Tokyo's Nikkei .N225 closed down 1.6 percent.

The dollar hit an almost three-week low against a basket of currencies .DXY but the index was last up almost 0.1 percent.

The greenback dipped 0.2 percent against the yen, which last traded at 120.32 to the dollar. The euro EUR= was down 0.2 percent at $1.1322.

"Until Thursday I think the dollar will be moved by strategic positioning (and) risk sentiment...rather than fundamental input," said Commerzbank (XETRA:CBKG) FX strategist Esther Reichelt in Frankfurt. "We have all the information we require so far to have a view on the U.S. dollar and nothing before Thursday is going to change any of that."

LIRA

In emerging markets, Turkey's lira TRYTOM=D3 fell to a record low of 3.069 to the dollar

Oil prices fell more than 1 percent after the Chinese data and on the prospect of dwindling demand, which analysts said was likely to diminish further if U.S. interest rates rise.

Brent crude LCOc1 , the global benchmark, was down 57 cents at $47.57 a barrel.

As stocks dropped, core government debt yields reversed course and fell. German 10-year Bunds DE10YT=TWEB , the euro zone benchmark, fell 1 basis point to 0.64 percent while U.S. 10-year Treasuries US10YT=RR yielded 2.18 percent, unchanged from Friday's New York close.

Copper turned lower in London on worries over China and the Fed. Three-month copper on the London Metal Exchange CMCU3 slipped 1.4 percent to $5,296.50 a tonne.

Gold XAU= fell to just above a one-month low, last trading at $1,105.30 an ounce.

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