GLOBAL MARKETS-Rally on Fed talk fades, dollar struggles
* Rally on Fed taper delay slows, European shares dip
* Wall Street seen firm with Apple results in focus
* Fed meeting could fuel more dollar selling
* Gold, copper steady, Brent oil rebounds
By Richard Hubbard
LONDON, Oct 28 (Reuters) - World share gains stalled near a six-year high and the dollar steadied on Monday as a rally built on expectations the U.S. Federal Reserve will stick with its loose monetary policy at a meeting this week ran out of steam.
A rise in U.S. stock index futures signaled further gains were possible when Wall Street opened though this was likely to depend on more encouraging news in quarterly corporate earnings report with tech bellwether Apple in the spotlight.
Most riskier assets rose sharply last week as the uncertainty caused by this month's U.S. government shutdown and a mixed batch economic data convinced many the Fed would delay any move to begin trimming its stimulus into next year.
"The events in Washington have all but cemented the idea that tapering will be a 2014 event." said Adam Cole, head of G10 FX strategy at RBC Capital Markets.
But with the dollar trading near its lowest levels of the year against most major currencies, the euro near a two-year high and many major global share indexes near record highs, investors are wary of pushing prices higher.
"We are less bullish in the short term than we were over the past few months. However, we do not envisage a fundamental change of direction," J.P.Morgan Cazenove wrote in a note.
Much will depend on what the Fed has to say when it wraps up a two-day rate setting meeting on Wednesday when it is widely expected to leave its $85 billion monthly bond buying program unchanged.
"It's the first Fed meeting since the government shutdown in the U.S. so any clues on when they may potentially taper will be welcomed by the market," said Greg Matwejev, director of FX Hedge Fund Sales and Trading at Newedge said.
The longer the Fed keeps its policy loose, the more U.S. yields stay low, which makes the dollar less attractive.
On Monday the dollar index was down at 79.17, not far from a near nine-month low of 78.998 touched on Friday while the euro had traded up to $1.3810, having touched a high of $1.3833 late last week.
While in the debt market core U.S. and German government Bund prices traded within tight ranges while investors await the outcome of the Fed meeting.
MSCI world equity index, which tracks share moves in 45 countries, was up 0.2 percent marking a fourth day of gains as it climbed back to towards a peak last seen in January 2008.
It's gains followed sharp rises earlier in Asia where Japan's Nikkei climbed 2.2 percent, clawing back most of Friday's 2.7 percent drop, and Australian shares put on 1.0 percent to end at a five-year high.
China's main share index, the CSI300, did buck the firmer trend to post a fifth straight loss as concerns about the government's efforts to cool inflation and rising property prices with higher short-term rates weighed on sentiment.
After opening strongly in line with Asian markets Europe's main indexes had turned lower by midday, reflecting a more mixed set of corporate earnings announcements and the caution over the recent run up.
The broad FTSEurofirst 300 index was down 0.3 percent as it shed some of last week's 0.6 percent gain which had taken the index to a five-year high.
The likelihood that Fed cash will keep flowing into the financial system for longer than many had anticipated was supported gold and other metal markets, but after strong gains last week these markets were also wary of pushing higher.
Spot gold was unchanged at $1,352 an ounce, still not far off a five-week high of $1,355.20 set on Friday. Copper was flat at $7,182 a tonne.
In the oil market, the positive sentiment flowing from the equity market had encouraged a slight rebound, with the global oil benchmark rising 71 cents to $107.69 a barrel though the market's attention was on developments in Libya which could threaten oil supplies.
Libya's crude oil exports have fallen to the lowest level in six weeks after operations at a key port were suspended over the weekend following fresh unrest.
"When there is less Libyan crude available it puts pressure on Brent, which are of similar light sweet grades," said Christopher Bellew, oil trader at Jefferies Bache.
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