Stocks around the world fell on Wednesday as investors were cautious ahead of an expected U.S. Federal Reserve interest rate rise later in the day that could see rates increase to their highest level since the global financial crisis.
European stocks declined, with indexes in Germany and France slipping around 0.2% in early trading. The MSCI world equity index, which tracks shares in 47 countries, was largely flat.
The Fed is widely expected to announce a 0.75 percentage point increase in its benchmark rate at the end of its two-day policy meeting on Wednesday. The rate could go as high as 5.5%, the highest level since 2007-2009.
In Asia, China's stock markets rose slightly but then edged lower. Hong Kong's Hang Seng fell 0.3% while the CSI 300 index in mainland China lost 0.2%. Japanese markets were closed for a holiday.
The prospect of higher U.S. rates boosted the U.S. dollar, while bond yields rose. The yield on 10-year Treasury notes hit 3.8905%, close to its highest level since 2011.
In the oil market, Brent crude futures slipped 0.3% to $83.32 a barrel as industry data showed a rise in U.S. crude inventories.
The euro gained 0.1% against the dollar but remained close to a two-week low as the market is pricing in an ECB rate hike this week, though any path for further hikes remains uncertain.
Overall, investors are cautious ahead of the Fed decision and further clarity on the outlook for interest rate hikes in major economies.
