Reuters: US Dollar Report: GLOBAL MARKETS-Dollar dips, stocks flat as Fed meets on stimulus

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GLOBAL MARKETS-Dollar dips, stocks flat as Fed meets on stimulus Sep 17th 2013, 16:25 Tue Sep 17, 2013 12:25pm EDT * MSCI world equity index ekes out gain as Wall St advances * Dollar dips but remains above four-week low * Oil drops below $110 as Syrian tensions ease further By Herbert Lash NEW YORK, Sept 17 (Reuters) - The dollar retreated and global equity markets were mostly flat on Tuesday even though Wall Street advanced, just ahead of the start of the Federal Reserve policy meeting that is expected to result in the beginning of a rollback of the Fed's stimulus program. Wall Street stocks rose, leading a measure of global equity markets to rebound, after data on U.S. consumer prices added to sentiment that Fed Chairman Ben Bernanke will lead the U.S. central bank to begin to modestly trim back its bond buying at the end of its two-day meeting on Wednesday. "It seems like now the market is believing that tapering will be very well managed by Bernanke, that he knows exactly what the market is expecting and that he's not going to disappoint," said Jack De Gan, principal and senior adviser at Harbor Advisory in Portsmouth, New Hampshire. U.S. consumer prices barely rose in August. However, gains in rents and medical care costs pointed to a stabilization in underlying inflation. A 1.8 percent rise over the past 12 months in so-called core inflation, which strips out the volatile energy and food components, could ease concerns about a disinflationary trend and could allow the Fed to begin to scale back its $85 billion a month in bond purchases. The Labor Department said its Consumer Price Index edged up 0.1 percent last month after rising 0.2 percent in July. Economists had expected consumer prices to rise 0.2 percent last month. The euro rallied against the dollar after a better-than-expected reading of a German sentiment survey, while European shares edged lower, pressured by weakness in the auto sector following a decline in demand last month. The euro was last up 0.017 percent at $1.3356. The dollar was down 0.16 percent versus a basket of six currencies at 81.165 and was last up 0.16 percent against the yen, at 99.21 yen. MSCI's all-country world equity index rose 0.01 percent, lifted by gains in U.S. stocks, in particular a 1.4 percent rise in shares of Apple Inc, to $456.46. The Dow Jones industrial average was up 43.69 points, or 0.28 percent, at 15,538.47. The Standard & Poor's 500 Index was up 5.28 points, or 0.31 percent, at 1,702.88. The Nasdaq Composite Index was up 18.60 points, or 0.50 percent, at 3,736.52. Europe's FTSEurofirst 300 index of leading European shares fell 0.41 percent to a provisional close of 1,253.30. Brent crude fell below $109 a barrel as a deal averting any imminent U.S. attack on Syria calmed fears of a disruption to Middle East oil supplies and after output resumed at a large oilfield in western Libya. Brent crude for delivery in November fell by $1.75 a barrel to a near-one-month low of $108.32. U.S. crude for October delivery was down 94 cents at $105.65 a barrel. U.S. Treasury debt prices rose as investors awaited the Fed's decision on stimulus and clues on how it might manage short-term interest rates. A recent Reuters poll showed economists expect the Fed to reduce its asset purchases by a relatively modest $10 billion a month. The Fed will release its policy statement at 2 p.m. (1800 GMT) on Wednesday, after the close of the meeting, followed by a news conference by Bernanke at 2:30 p.m. Longer-dated U.S. Treasuries prices turned lower, erasing earlier gains, as higher Wall Street stock prices and weaker German Bunds reduced initial bids for U.S. government debt. Benchmark 10-year Treasury notes were up 4/32 price to yield 2.8458 percent. The U.S. labor market remains fragile and job growth has been running below the pace seen in prior economic recoveries, which might lead Fed policy-makers to begin tapering by a modest amount, analysts said. "The jobs market continues to grow, but at a pace that is less than ideal. Nonetheless, all indications are that the Fed is poised to announce tomorrow that they will begin to pare back their bond purchases," said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. Safe-haven Bunds fell after data showed the ZEW German economic sentiment survey for September rose to 49.6 from 42.0 in August, significantly above the 46.0 consensus forecast. Bund futures settled down 43 ticks at 138.07, and last was 33 ticks lower on the day at 138.18. Link this Share this Digg this Email Reprints

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