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GLOBAL MARKETS-Dollar eases before Fed, BOJ meetings; oil up

Published 20/09/2016, 07:08 am
© Reuters.  GLOBAL MARKETS-Dollar eases before Fed, BOJ meetings; oil up
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* Fed monetary policy meeting starts Tuesday

* U.S. stocks end little changed

* U.S. bond yields dip (Updates with U.S. market closing levels)

By Caroline Valetkevitch

NEW YORK, Sept 19 (Reuters) - The U.S. dollar weakened on Monday on expectations the Federal Reserve will leave interest rates unchanged after its policymakers meet this week, while oil prices rose from multi-week lows.

A growing belief that the Bank of Japan, which also meets this week, will stop short of the dramatic action needed to weaken its currency also weighed on the dollar.

U.S. stocks cut early gains to end flat, with a rise in big bank stocks offsetting a drag from Apple AAPL.O .

Weak recent U.S. data has boosted bets that the Fed will skip the chance to raise rates at this week's meeting, but investors will listen closely to Chair Janet Yellen's speech on Wednesday for any hint that the central bank could hike as soon as December. reports on what the BOJ might do have stoked market uncertainty. Speculation is rife that the BOJ will change tack in favor of a policy mix that would add stimulus while protecting banks from problems generated by negative interest rates on deposits. central bank meetings are scheduled for Tuesday-Wednesday.

"The market is of the mindset that Tokyo is at or near the end of its monetary rope," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.3 percent at 95.858 .DXY after hitting a 15-day high of 96.108 on Friday.

The dollar hit a six-day low against the yen of 101.59 yen JPY= .

The Dow Jones industrial average .DJI slipped 3.63 points, or 0.02 percent, to 18,120.17, the S&P 500 .SPX lost 0.04 point to 2,139.12 and the Nasdaq Composite .IXIC dropped 9.54 points, or 0.18 percent, to 5,235.03.

"There was money looking for a home and was being put into the (equity) market this morning with the anticipation the Fed's not going to do anything," said Bucky Hellwig, senior vice president at BB&T (NYSE:BBT) Wealth Management in Birmingham, Alabama.

"But there was some discussion that perhaps the statement that comes from Fed may have a hawkish tone. If it's too hawkish, we get almost the equivalent of a rate increase."

Apple shares shed 1.2 percent after registering huge gains last week. The stock was the biggest drag on the three major U.S. indexes.

The rate-sensitive S&P financial index .SPSY rose 0.5 percent.

MSCI's all-country world stock index .MIWD00000PUS was up 0.5 percent, while European shares .FTEU3 closed up 1 percent.

Oil prices rose after Venezuela said OPEC and non-OPEC producers were close to a deal to stabilize the market. crude futures LCOc1 gained 0.4 percent to settle at $45.95 a barrel and U.S. crude CLc1 gained 0.6 percent to settle at $43.30, off highs earlier in the day. Last week, Brent hit a two-week low and U.S. crude fell to a five-week low.

In the U.S. bond market, yields dipped as traders booked profits ahead of the Fed and BOJ meetings.

Benchmark 10-year Treasury notes US10YT=RR were up 2/32 in price for a yield of 1.694 percent, down 0.7 basis point from late on Friday. the metals market, gold prices rose as the dollar slipped. Spot gold XAU= was up 0.3 percent at $1,313.39 an ounce.

There was little discernible market reaction to weekend bombings in New York City and New Jersey and a stabbing at a Minnesota shopping mall.

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

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