* Dollar up before start of Fed meeting, sterling falls
* Wall Street seen following U.S. shares lower
* Oil falls as OPEC says stocks still rising despite output
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Nigel Stephenson
LONDON, March 14 The dollar rose before the
start on Tuesday of a Federal Reserve policy meeting expected to
raise U.S. interest rates, while European shares fell as
investors faced a week packed with political and market risks.
Wall Street looked set to follow Europe lower, index futures
showed , having traded in a very tight
range on Monday with eyes on the Fed.
The U.S. central bank said in a statement its two-day
meeting would go ahead as planned, dispelling doubts
policymakers would brave a snowstorm hitting Washington.
While the Fed meeting is the focus for markets this week,
investors also have to assess the impact of central bank
meetings in Britain and Japan, a gathering of G20 finance
chiefs, U.S. President Donald Trump's first budget and a tense
election in the Netherlands.
"With a busy calendar of geopolitical events coming up, in
particular across the euro zone, investors could be seen to be
taking some risk off the table with several potentially volatile
events lined up," Charles Hanover Investments partner Dafydd
A Fed rate rise on Wednesday is seen as all but certain and
investors will focus on new economic forecasts and any clues as
to how many rate hikes can be expected this year.
The dollar index, which measures the greenback
against six other major currencies, rose 0.3 percent.
The euro fell 0.2 percent to $1.0629 while the yen
was flat at 114.90.
Sterling fell 0.6 percent to $1.2136, having
dropped as far as $1.2107, its weakest since Jan. 17, reversing
gains chalked up on Monday when Scotland's leader demanded a new
referendum on independence but not before autumn 2018.
"The big question is 'does the Fed become even more hawkish
and point towards the possibility of more than three rate
hikes?'," said Constantin Bolz, head of currency strategy at UBS
Wealth Management in Zurich.
"That would be dollar-positive. But if they do it like they
usually do -- deliver a hike today but keep the promise to hike
very gradually -- then the dollar could rather give back a
The pan-European STOXX 600 share index fell 0.3
percent, led lower by a 1 percent fall in banks.
MSCI's broadest index of Asia-Pacific shares outside Japan
was up 0.2 percent, while Japan's Nikkei
closed down 0.1 percent.
Shares in Toshiba Corp. closed up 0.5 percent after
plunging as much as 8.8 percent, their biggest one-day loss for
almost a month.
Toshiba failed to submit audited third-quarter earnings for
a second time on Tuesday, gaining a one-month extension, and
said it would speed up looking at whether to sell a majority of
its U.S. nuclear unit Westinghouse.
China's blue-chip CSI300 index dipped 0.1 percent
after data showing investment was higher than forecast in the
first two months of the year.
Yields on benchmark 10-year German government bonds
, seen as one of the world's safest assets, briefly
hit 14-month highs above 0.5 percent.
Traders cited a slight easing of concern over the Dutch
election after a poll on Monday showed Prime Minister Mark
Rutte's conservatives increasing their lead over nationalist
Geert Wilders's Party for Freedom (PVV), compared with the
pollster's previous survey.
The move later reversed, however, and German yields last
stood at 0.46 percent, down 2 basis points on the day.
Oil fell to 3-1/2-month lows after the Organization of the
Petroleum Exporting Countries (OPEC) reported oil stocks were
still rising despite agreed output cuts.
Brent, the international crude benchmark, traded 60
cents lower at $50.75 a barrel.
Gold was flat at $1,203 an ounce.
For Reuters 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
(Additional reporting by Nichola Saminather in Singapore, John
Geddie, Jemima Kelly, Kit Rees and Jamie McGeever in London;
Editing by Catherine Evans)