LONDON (AP) — The mood in financial markets Wednesday was subdued ahead of a crucial policy statement from the U.S. Federal Reserve.
The Fed is widely expected to begin reducing its monetary stimulus when it concludes its two-day policy meeting later. Since the 2008 global financial crisis, the Fed has pumped trillions into the U.S. economy in an attempt to get the economy going again.
Recent indicators have suggested that the U.S. economy has improved and that's prompted the central bank to consider unwinding down the program. The Fed is currently buying $85 billion worth of financial assets, such as bonds, every month to keep a lid on borrowing rates and get lending going.
Fed chairman Ben Bernanke put markets on notice in May that "tapering" was likely this year. Most economists think the Fed will announce a $10 billion reduction in monthly bond purchases and try to provide a roadmap for the months ahead.
Stock markets are hoping for a small reduction because the bond-buying has kept interest rates super-low, making it cheaper to borrow money. The low bond yields and flow of new money led investors to pile into stocks all round the world. Other repercussions have included gains in commodity prices and a broad-based fall in the dollar.
"What markets are seeking is a sense of direction," said Joshua Mahoney, research analyst at Alpari.
In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 6,553 while Germany's DAX rose 0.3 percent to 8,619. The CAC-40 in France was 0.3 percent higher at 4,159.
In the U.S., the Dow Jones industrial average was down 0.2 percent at 15,500 while the broader S&P 500 index fell 0.1 percent to 1,703.
The mood was cautious in other financial markets as well. Among currencies, the euro was flat at $1.3352 while the dollar fell 0.2 percent to 98.92. In the oil markets, the benchmark New York crude contract was up 88 cents at $106.30 a barrel.
Earlier, in Asia, Japan's Nikkei 225 rose 1.4 percent to close at 14,505.36 but Australia's S&P/ASX 200 lost 0.3 percent to 5,238.10. Hong Kong's Hang Seng, which had gained more than 1,000 points so far this September by Tuesday's close, fell 0.3 percent to 23,117.45 as investors booked profits.