World markets mostly down as investors eye Fed

SEOUL, South Korea (AP) -- Global stock markets were mostly lower Wednesday as investors waited for an update on the U.S. economy from the Federal Reserve.

Investors were waiting to see if the Fed, which wraps up a two-day policy meeting later in the day in Washington, will make changes to its strategy of super-low interest rates and easy money that is helping to shore up the U.S. economy. Any change is likely to ripple through stock markets.

Stocks in Hong Kong, mainland China and Seoul went south. Hong Kong's Hang Seng index fell 1.1 percent to close at 20,986.89, while South Korea's KOSPI index shed 0.7 percent to 1,888.31. Shares also fell in New Zealand, Taiwan, the Philippines, Singapore and Indonesia.

"Foreign investors are selling more shares than they are buying but trading volume remains thin," said Kim Hyoung-ryoul, a market analyst at Kyobo Securities Co. in Seoul. "As the result of the Fed meeting comes out early Thursday morning in South Korea, the market is reflecting a wait-and-see attitude."

Worries that the Fed may scale back its bond purchase program made shares in emerging markets sway in recent days. Super-easy monetary policies by central banks in advanced economies like the U.S. prompted money to flow into Asian markets, which could see a reversal when the global central banks unwind their aggressive stimulus programs.

Asia's heavyweight Japan was among the rare bright spots. The Nikkei 225 stock average rose 1.8 percent to 13,245.22 while Australia's S&P/ASX 200 index was up 1 percent to 4,861.40.

In early European trading, Britain's FTSE 100 dropped 0.5 percent to 6,341.91. Germany's DAX fell 0.4 percent to 8,195.46. France's CAC-40 shed 0.6 percent to 3,838.07.

Wall Street also appeared set for a flat open, with Dow Jones industrial futures hovering at 15,245. S&P 500 futures slipped marginally to 1,644.80.

For weeks now, markets have been gripped with uncertainty over whether the Fed will start reducing its financial assets purchases. The Fed's super-easy monetary policy has helped drive sentiment in the markets. Any reduction — so-called tapering — could spook investors who have become accustomed to seeing much of the money generated by the policy ending up in financial markets.

The uncertainty was caused by comments made by Fed chairman Ben Bernanke in May and investors will be hoping for a clearer picture at the end of the meeting Wednesday. Though no change is expected, investors will be looking for a clearer line in the accompanying Fed statement and in Bernanke's post-meeting press conference.

Tuesday's batch of U.S. data did little to add to the debate over the Fed's stance. The rise in inflation to 1.4 percent in the year to May from 1.1 percent in April was in line with predictions and largely due to base effects. Meanwhile, the 6.8 percent rise in housing starts during the month was a tad lower than anticipated.

Benchmark oil for July delivery rose 34 cents to $98.78 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 67 cents to close at $98.44 a barrel on the Nymex on Tuesday.

In currencies, the euro fell to $1.3391 from $1.3405 late Tuesday in New York. The dollar fell to 95.06 yen from 95.27 yen.