(adds jobless claims data)
* Markets wait for U.S. Fed rate decision, due at 1800 GMT
* Asian shares end higher, Europe flat ahead of decision
* Dollar drifts lower
* U.S. short-term yields near 4 1/2-year high
By Marc Jones
LONDON, Sept 17 (Reuters) - World stocks inched to a
three-week high and the dollar drifted lower on Thursday as
markets waited to see if the Federal Reserve would raise U.S.
interest rates for the first time in almost a decade, or opt to
wait a little longer.
Before the announcement at 1800 GMT, markets were still
leaning towards the latter although the high uncertainty had
kept Europe main markets .FTEU3 at virtual standstill for most
of the session after two days of gains. .EU
Rises overnight in Asia meant MSCI's all-world share index
.MIWD00000PUS had managed a three-week high, but it was small
scale stuff and currency and bond markets moves were low key
too.
The dollar .DXY was under some mild pressure, mostly from
the euro EUR= after weak U.S. inflation data had underscored
one of the arguments for the Fed to hold fire.
Wall Street ESc1 meanwhile was also set for a subdued
start after it had finished at a near month high on Wednesday
while oil LCOc1 and other commodities gave back some of the
sharp gains they had made. O/R MET/L
"I think path (timeline for future moves) is more important
than the rate decision today," said Didier Duret, Chief
Investment Officer at ABN Amro.
"They want to stabilise the market's confidence, so I think
they will wait till October ... but they will maintain a very
prudent and cautious approach, after all they are still the
masters of the universe."
The Fed's decision is attracting so much attention in world
markets because a hike would be its first since 2006 as well as
finally lifting rates from the near zero they have been at since
the depths of the global financial crisis in late 2008.
It has been expected to pull the trigger for most of this
year, but those expectations have faded following a bout of
global market turmoil over the past couple of months, especially
in China.
A further drop in jobless claims ID:nL1N11M1IH ahead of
the U.S. open bolstered signs of improvement in the employment
market. But futures price continued to suggest an only one in
four chance 0#FF: of a hike later in the day.
The latest poll by Reuters on Wednesday also showed the
majority of economists also now expect no hike, although it
remains a close call. ID:nL4N11L32T
(Fed rate decision in graphics:
http://graphics.thomsonreuters.com/15/fed/index.html)
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Currencies vs dollar http://link.reuters.com/tak27s
China's volatile markets http://link.reuters.com/myh35w
Global assets in 2015 http://link.reuters.com/dub25t
World interest rates: http://link.reuters.com/xyb96s
Commodities performance http://link.reuters.com/rac73w
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
FEDY STEADY GO?
Wall Street's S&P 500 ESc1 , Dow Jones Industrial 1YMc1
and the Nasdaq indexes NQc1 were expected to spend the final
hours of the Fed countdown 0.2 and 0.3 percent in the red after
all three hit near one-month highs on Wednesday. .N
MSCI's 45-country all world index .MIWD00000PUS had
reached a similar peak overnight after Japan's Nikkei .N225
shrugged off another drop in exports ID:nL4N11K32W to climb
1.4 percent and Australian .AXJO and Malaysian shares .KLSE
rose 1 and 1.8 percent.
There was a late 2 percent dip in Chinese stocks .CSI300 ,
but after their recent volatility it raised few eyebrows.
Even if the Fed were to raise rates later, many market
players expect officials to signal a cautious stance on the pace
of future increases, rather than herald a brisk series of
increases.
There is also the comfort that both the European Central
Bank and the Bank of Japan appear to be gearing up for fresh
rounds of stimulus and rates are still being cut in many parts
of the world.
Switzerland's central bank said on Thursday, for example,
that its negative interest rates, the lowest in the world,
would stay in place for the foreseeable future, as it seeks to
weaken a "significantly overvalued" Swiss franc and combat a
deeper-than-expected bout of deflation. ID:nL5N11N15W
The latter worry was pinned on the recent slump in oil
prices.
They appear to have largely stabilised over the past month
following their April to August swoon but were giving up ground
again ahead of U.S. trading. U.S. West Texas Intermediate (WTI)
crude CLc1 was down 1.5 percent at $46.45 per barrel and Brent
LCOc1 back under $50 a barrel to $48.90.
Gold XAU= , also dipped to $1,120 per ounce and silver
XAG= and other metals markets were down too after most had
made decent gains on Wednesday.
In bond markets there was no getting away from the Fed
debate. The yield on the U.S. two-year treasury note, seen as
most sensitive to the Fed's decision, held near a 4-1/2-year
high at 0.803 percent US2YT=RR .
Even if the central bank does not pull the trigger later, it
is still expected to by the end of the year.
Euro zone bonds were largely steady, meanwhile, as France
and Spain breezed through the potentially uncomfortable task of
selling debt hours before the U.S. rate decision. GVD/EUR
ID:nZYN26JT00