European shares higher, Asia patchy, as U.S. Fed weighs rate hike

TOKYO -- European stocks were higher Tuesday, after sharp losses the previous day, while Asian markets were patchy in a sign of volatile trading ahead of Federal Reserve and Bank of Japan policy meetings.

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KEEPING SCORE: Germany's DAX gained 1.6 per cent to 10,303.05 and Britain's FTSE 100 was up 1.3 per cent at 5,949.47. France's CAC 40 jumped 1.7 per cent to 4,549.69. Wall Street seemed poised to extend Monday's last minute gains. Dow futures were up 0.6 per cent at 17,349.00. S&P 500 futures rose 0.6 per cent to 2,021.20.

THE FED: The Federal Reserve's last meeting of the year begins Tuesday, and it is expected to raise interest rates for the first time in almost a decade on Wednesday. The Fed's key short-term interest rate has been near zero since Dec. 16, 2008. A rate hike would signal confidence in the U.S. economy, but some investors worry it may slow growth.

JAPAN STIMULUS: Mixed economic data for Japan are keeping alive, though just barely, hopes for more stimulus from the Bank of Japan to help spur the recovery. But most economists do not expect such a move at the policy meeting that wraps up on Friday.

THE QUOTE: With the Fed meeting nearing, "we think that markets may turn cautious though a rate hike is already being priced in," Mizuho Bank Ltd. said in its daily market report. "The element of surprise may come from the Fed's rhetoric."

ASIA'S DAY: Japan's Nikkei 225 stock index fell 1.7 per cent to 18,565.90 as the yen rose against the U.S. dollar. Australia's S&P/ASX 200 fell 0.4 per cent to 4,909.60 and Hong Kong's Hang Seng lost 0.2 per cent to 21,274.37, while the Shanghai Composite fell 0.3 per cent to 3,510.35. South Korea's Kospi was up 0.3 per cent at 1,932.97. Markets in New Zealand, Taiwan rose and shares in Southeast Asia were mixed.

ENERGY: The price of U.S. crude oil fell below $35 a barrel on Monday for the first time since early 2009 but then rebounded to gain about 2 per cent, or 69 cents, to $36.31 a barrel. In Asia on Tuesday, U.S. crude lost 15 cents to $36.16 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, a benchmark for international oils, rose 13 cents to $38.29.

CURRENCIES: The dollar dropped to 120.94 yen from 121.09 yen on Monday. The euro rose to $1.1023 from $1.0994.


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