European shares, euro steady awaiting Fed decision

 

LONDON (Reuters) - European shares and the euro steadied on Wednesday, pausing after strong gains, as investors waited to see if the U.S. Federal Reserve will adopt further monetary stimulus to help counter faltering economic growth.

The Fed is set to announce its monetary policy decision at 1630 GMT at the conclusion of a two-day policy meeting, with expectations high that the U.S. central bank will extend its bond-buying program dubbed "Operation Twist".

The hopes for more liquidity from the Fed lifted many riskier asset markets on Tuesday, sending MSCI's world share index up over 1.2 percent <.MIWD00000PUS> and leaving the risk of some disappointment also high.

"It's almost a sure thing that if the Fed fails to deliver to expectations, markets will quickly unwind yesterday's gains, which were premised almost solely on anticipated Fed action," said Cameron Peacock, an analyst at IG Markets.

The FTSE Eurofirst 300 (.FTEU3) index of top European shares was down 0.2 percent in early trading at 1,008.32 points after surging 1.6 percent to a one-month high in the previous session.

Meanwhile, German 10-year bond yields edged up and equivalent Spanish debt yields eased on the hopes of Fed action but traders were cautious ahead of a debt auction by Spain on Thursday.

The euro eased a fraction to trade around $1.2684, after rallying nearly 1 percent in the previous session.

 
(Reporting by Richard Hubbard; Editing by Anna Willard)

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