* Fed, BOJ meetings this week see caution set in
* Dollar starts week on the back foot
* Crude oil drops after logging 3rd weekly rise
* European shares fall 0.7 percent, dropping for 3rd day
By Marc Jones
LONDON, April 25 (Reuters) - World stocks, the dollar and
oil all saw modest falls on Monday as investors locked in some
recent gains ahead of central bank meetings in the United States
and Japan this week.
Asia and Europe both sank as Tokyo .N225 gave back 0.8
percent of the 4 percent it had made last week and 3 and 1.5
percent falls for miners .SXPP and oil firms .SXEP pushed
the FTSEurofirst 300 .FTEU3 down for a third straight day.
As well as signs the 3-month rally in stocks and commodities
markets is cooling, a U.S. Federal Reserve rate decision on
Wednesday and the Bank of Japan meeting on Thursday meant there
was little incentive for traders to be bold.
Talk has been that Japan could push deeper into negative
interest rate territory, while there is intense interest on
where the Fed currently stands on another rate hike.
"Central banks are still the name of the game," said
Nordea's chief strategist for developed markets, Jan von Gerich.
"There is a chance that the Fed could surprise with a bit of
hawkishness on Wednesday. The dollar hasn't really strengthened
and the S&P 500 is back near its all-time high, so they could
certainly test the market."
The dollar index .DXY was trading 0.2 percent lower on the
day at 94.963. Against the euro, it dipped to $1.1270, at the
weaker end of a 10-cent range it has held for a year, while the
yen rose to 111.24 after a walloping at the end of last week.
Britain's sterling, meanwhile, had hit its highest in over a
month after a UK media blitz from President Barack Obama calling
for Britain to stay in the European Union saw bookmakers
lengthen the odds of a Brexit vote in June.
"If one of our best friends is in an organisation that
enhances their influence and enhances their power and enhances
their economy, then I want them to stay in it," Obama said.
The subdued start to the week for Europe's stock markets,
was further compounded by an unexpected fall in German business
morale data.
The Munich-based Ifo economic institute said its business
climate index, which surveys around 7,000 firms, dipped to 106.6
in April compared to a forecast of a rise to 107.0.
One of IFO's top economist said the mood in the German
economy was still good, however, albeit not euphoric.
BOJ MEETING
The jittery mood sent investors back into government bonds,
having largely shunned them for the last couple of weeks.
Bund yields DE10YT=TWEB fell a fraction but remained above
0.2 percent having ended Friday with their biggest weekly rise
since last December. GVD/EUR
In Asia overnight, Chinese shares had continued their recent
poor run as the blue-chip CSI300 index .CSI300 and Shanghai
Composite Index .SSEC slipped 0.5 and 0.6 percent
respectively. .SS
Japan's Nikkei .N225 ended down 0.8 percent as the yen
pulled off its lows. MSCI's benchmark 23-country emerging market
index .MSCIEF dropped roughly the same as it saw its second
consecutive session of falls.
Japan's central bank on Thursday is likely to cut its price
forecasts and debate whether a strong yen, weak global demand
and soft consumption have hurt inflation expectations enough to
warrant another hit of stimulus.
"We've had a strong 20 days and now is the point where the
index will break out or move sideways in anticipation of further
catalysts," said Martin King, co-managing director at Tyton
Capital Advisors.
Among commodities, crude oil prices slipped after rising on
Friday and notching their third straight week of gains as market
sentiment turned more upbeat amid signs a persistent global
supply glut may be easing. O/R
Brent LCOc1 fell 1 percent to $44.64 a barrel, while U.S.
crude CLc1 shed 1.3 percent to $43.16.
Shanghai aluminium futures jumped to their highest level in
nearly 10 months amid optimism about a demand pick-up up in
China, while gold ticked higher as the dollar receded.