Stocks hit new high but all eyes on the Fed

World stocks eked out a new record high on Wednesday and the dollar dipped against its major rivals with the focus on a US Federal Reserve policy meeting that may give clues as to whether it will raise interest rates for a third time this year.

European shares opened lower after a slight rise on Asian bourses was enough to push MSCI's World index fractionally higher to a new record.

But with the Fed due to unveil its policy decision and economic forecasts at 1800 GMT, caution prevailed. There was little follow-through from US President Donald Trump's bellicose rhetoric over North Korea on Tuesday.

The dollar fell less than 0.1 per cent against a basket of major currencies and was down against the euro, the yen and sterling.

US 10-year Treasury yields, which edged up on Tuesday, retreated slightly. German equivalents edged up less than a basis point to 0.45 per cent.

The European Central Bank is widely expected to say next month that it will begin scaling back its asset-purchase stimulus programme from January, even though a stronger euro, which dampens inflation, has complicated the outlook.

"If we move closer to a US rate hike, that should come along with a bit more dollar strength and euro weakness which would harden the ECB's exit case and be a headwind for government bonds," said Commerzbank strategist Rainer Guntermann.

The pan-European STOXX 600 share index dipped less than 0.1 per cent. An index of European banks was a leading faller, down 0.3 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan added 0.1 per cent. Japan's Nikkei closed up 0.05 per cent and Shanghai added 0.3 per cent. - Reuters

Source: Khaleej Times