* 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 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
"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
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.