World stocks mostly rose on Tuesday as investors put aside
worries over Europe's debt crisis to await the outcome of a two-day Federal Reserve meeting that many hope will announce measures to boost US growth.
Oil prices rose above $86 a barrel while the dollar strengthened against the yen but slipped against the euro.
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European shares were higher in early trade. Britain's FTSE 100 rose 0.5 per cent to 5,287.68. Germany's DAX jumped 1.3 per cent to 5,488.83 and the CAC-40 in Paris gained 0.7 per cent to 2,961.74. Wall Street was set to open higher too, with Dow Jones futures up 0.2 per cent to 11,345. S&P 500 futures rose 0.1 per cent to 1,199.40.
Japan's Nikkei 225 index fell 1.6 per cent to close at 8,721.24 as export shares sagged amid a persistently strong yen that weighs on company profits. Australia's S&P/ASX 200 dropped 1 per cent to 4,040.20. Benchmarks in Indonesia and the Philippines also fell.
Indian markets unaffected, close with 354 points gain But Hong Kong's Hang Seng rose 0.5 per cent to 19,014.80 and South Korea's Kospi was 0.9 per cent higher at 1,837.97. Mainland China's Shanghai Composite Index rose 0.4 per cent to 2,447.76 while the smaller Shenzhen Composite Index was 0.4 per cent higher at 1,071.60.
Indexes in India, Singapore and Thailand also gained.
Investors are reluctant to engage in big moves as talks dragged on between international lending officials and Greece, which would default on its towering national debt if it doesn't receive the next installment of an international loan.
"Today you don't have the panic selling you had yesterday, but still there is no buying. So we are in for a long bear market. I don't think the market is ready to rebound yet," said Francis Lun, managing director of Lyncean Holdings Ltd. in Hong Kong.
Meanwhile, Standard & Poor's
downgrade of Italy's credit rating on Monday added to "the pain and fear" across European markets, Credit Agricole CIB said in a research note. Italy's rating was cut by one notch due to weakening economic growth prospects and higher-than-expected levels of government debt, S&P said.
"Risk aversion remains highly elevated, with little prospect of a drop any time soon as Italy's downgrade adds to Europe's woes," Credit Agricole said.
In Tokyo trade, Honda Motor Corp dropped 3.1 per cent and electronics giant Sony Corp fell 4.1 per cent. Fujitsu Ltd, which provides technology services for mobile devices and servers, tumbled 4.2 per cent.
Japanese Finance Minister Jun Azumi told reporters on Tuesday that the recent sharp rise of the yen has slowed the pace of the country's economic recovery from the March earthquake and tsunami. Tokyo has not ruled out intervening in the currency market to stem the yen's rise against the US dollar and other major currencies.
Investors are looking to the US Federal Reserve meeting for positive news. Many economists expect the Fed, which starts a two-day policy meeting later Tuesday, to announce something to jolt the sputtering US economy.
Last month, the Fed took the unprecendented step of promising short-term interest rates near zero through mid-2013.
Some economists expect the Fed to eventually try for the third time to stimulate growth through a program to buy Treasurys to lower long-term interest rates. That's a step known as "quantitative easing."
But hopes of Fed action did not mollify intensifying worries over Greece. Investors fear that it won't get the money it needs to avoid a default.
The Dow Jones industrial average closed down 0.9 per cent at 11,401.01 on Monday. The drop ended five days of gains for stocks and marked the return of the back-and-forth trading that has accompanied the uncertainty about Europe's debt crisis.
The Nasdaq composite fell 0.4 per cent to 2,612.83. The Standard & Poor's 500 index fell 1 per cent to 1,204.09.
Benchmark oil for October delivery was up 92 cents at $86.62 in electronic trading on the New York Mercantile Exchange. Crude dropped $2.26 to settle at $85.70 on Monday.
In London, Brent crude for November delivery was up 66 cents at $109.80 on the ICE Futures exchange.
In currencies, the dollar rose to 76.58 yen from 76.50 yen in late trading Monday in New York. The euro rose to $1.3680 from $1.3671.
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