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Trader Sal Suarino, left, works on the floor of the New York Stock Exchange. (AP)

Equities grind lower as Fed rate decision looms

WT24 Desk

World stock markets mostly drifted lower on Friday despite a tail wind from Wall Street as investors braced for the Federal Reserve’s decision on interest rates next week, agencies report.

France’s CAC 40 dropped 0.7 per cent to 4,564.23 and Germany’s DAX fell 0.8 per cent to 10,125.30. Britain’s FTSE 100 shed 0.3 per cent to 6,134.61. Futures augured losses on Wall Street after gains on Thursday. Dow futures fell 0.4 per cent to 16,145.00. S&P 500 futures eased 0.4 per cent to 1,932.70.

Traders remain focused on a two-day meeting of Federal Reserve policymakers that ended on Thursday. They are trying to anticipate when and how quickly the central bank will begin to raise interest rates from their historically low levels. Those low rates have been a key factor sending stock prices higher over the past seven years. A report on Thursday showing a decline in applications for unemployment claims was the latest optimistic sign on the job market, which could prompt the Fed to tighten credit.

Bank of England minutes released on Thursday noted improving economic prospects for the UK, which is one of Europe’s mainstay economies. Job figures from Australia showed unexpected improvement. The United States, the world’s biggest economy, has released a string of robust employment data while officials in No 2 economy China have been insisting its growth is on a steady path. In the past week, both Japan and the bloc of euro countries revised recent GDP growth figures, leading to a less pessimistic view of those economies.

“Yesterday’s Bank of England minutes noted positive economic prospects and encouraged markets to the view that it’s likely to follow the Fed by beginning to lift interest rates next year,” said Ric Spponer, chief analyst at CMC Markets in Sydney.

Hong Kong’s Hang Seng shed 0.3 per cent to 21,504.37 while China’s Shanghai Composite Index added 0.1 per cent to 3,200.23. Japan’s Nikkei 225 fell 0.2 per cent to 18,264.22 and South Korea’s Kospi shed 1.1 per cent to 1,941.37. Australia’s S&P/ASX 200 fell 0.5 per cent to 5,071.10. Stock benchmarks rose in Taiwan, Indonesia and the Philippines.

Indian equities ended four weeks of losses in volatile trade as investors awaited monthly factory production data and concerns eased that China’s financial-market turmoil will derail global growth.

The Sensex declined less than 0.1 per cent to 25,610.21 at the close after swinging between a gain of one per cent and a loss of 0.4 per cent. The gauge climbed 1.6 per cent this week, ending its longest stretch of weekly losses since October, before the Federal Reserve’s interest-rate decision next week.

Benchmark US crude was down $1.12 at $45.73 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, a benchmark for international oils, was down $1.10 at $47.79 in London after rising $1.31 to close at $48.89 a barrel in the previous trading day.

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