LONDON (AP) — Markets were steady Wednesday ahead of the U.S. Federal Reserve's first policy statement of the year, which has the potential to indicate a shift in its monetary stance.
The Fed has operated a super-easy and super-cheap monetary policy since the financial crisis started in 2007, but there is a growing expectation that it may be tempted to reverse its position sometime this year.
The Fed's statement following a two-day meeting, due after European markets close but bang in the middle of the U.S. trading session, will be closely monitored.
Last month the Fed said that as long as inflation remained modest, it could keep short-term rates near zero until the unemployment rate dips below 6.5 percent from the current 7.8 percent. That could take until the end of 2015, the Fed said.
Anything dramatically different could have a big impact.
"Another poor U.S. consumer confidence reading yesterday served to bolster investor confidence that the Fed would renew its commitment to asset purchases and triggered another round of buying," said Mike McCudden, head of derivatives at Interactive Investor.
"However, with markets looking overbought, we may be due a sharp correction and investors should certainly be trading with caution," he added.
Investors look like they are taking that advice.
In Europe, the FTSE 100 index of leading British shares was up 0.2 percent at 6,352 while Germany's DAX was unchanged at 7,850. The CAC-40 in France was 0.1 percent higher at 3,790.
Wall Street was poised for a flat opening with both Dow futures and the broader S&P 500 futures barely 0.1 percent higher. How they actually open could well hinge on the first estimate of U.S. economic growth in the final quarter of 2012 and the monthly jobs figures from private payrolls firm ADP.
The consensus in the markets is that the U.S. economy grew by an annualized rate of 1.1 percent in the final three months of the year, way down on the previous quarter's 3.1 percent.
"A large part of this fall will undoubtedly be attributed to the fallout from Hurricane Sandy as well as uncertainty brought on by the political logjam that was the fiscal cliff negotiations," said Michael Hewson, senior market analyst at CMC Markets.
Perhaps of more interest will be the ADP report given that it is released two days before official government figures, which often set the stock market tone for a week or two after their release. The consensus is that 165,000 private jobs were created during January.
Many stock indexes have hit multi-year highs in recent days after a stellar start to 2013. Much of that has been due to rising hopes over the U.S. economy, but signs of an easing in investors' concerns over Europe's debts have also helped.
The dollar stands to be one financial asset at the forefront of the current focus on the U.S. Ahead of the figures, the euro was 0.3 percent higher at $1.3530.
Earlier in Asia, Japan's Nikkei surged 2.3 percent to 11,113.95, its highest closing since late April 2010, as the yen continued to weaken against the U.S. dollar. The dollar was 0.6 percent higher at 91.34 yen.
Hong Kong's Hang Seng rose 0.7 percent to 23,822.06. South Korea's Kospi rose 0.4 percent to 1,964.43 after the government said manufacturing output rose 0.8 percent in December from November.
Oil prices were steady too with the benchmark New York rate up 2 cents at $97.59 a barrel.
Pamela Sampson in Bangkok contributed to this report.