GLOBAL MARKETS-Fed QE guessing game weighs on world stocks

* MSCI world equity index down 0.4 pct at 314.49

* U.S. GDP seen key ahead of Fed’s QE decision next week

* Dollar near record lows vs yen; oil falls

By Natsuko Waki

LONDON, Oct 29 (BestGrowthStock) – World stocks fell on Friday and
the dollar slid towards its 1995 record low versus the yen as
investors braced for U.S. growth data to assess the likely scale
of fresh Federal Reserve monetary easing.

Third-quarter growth data for the world’s biggest economy
due out on Friday will be a key factor for the Fed, which is
expected to decide next week on the scale of its bond buying as
part of a quantitative easing programme.

In the past week investors have become nervous that the Fed
may disappoint the markets with the scale of fresh easing. Most
leading economists expect the Fed to say it will buy $80 billion
to $100 billion worth of assets per month. [FED/R]

“There is uncertainty ahead of the Fed statement for sure,”
said Bernard McAlinden, investment strategist at NCB
Stockbrokers in Dublin.

“There’s a feeling the market maybe has over-priced in QE.
You’ve had half-decent data in the United States. I think the
Fed will announce QE. It’s a question of how much and the nature
of what they do.”
MSCI world equity index (.MIWD00000PUS: ) fell 0.4 percent.
moving away from a two-year high set earlier this week. The
index is still up 5 percent since January.

The Thomson Reuters global stock index (.TRXFLDGLPU: ) lost
0.6 percent, while the FTSEurofirst 300 index (.FTEU3: ) and U.S.
stock futures (SPc1: ) were down around 0.5 percent.

Emerging stocks (.MSCIEF: ) dropped a third of a percent.

Data from fund tracker EPFR shows flows into emerging market
funds slowed significantly in the fourth week of October as
investors awaited the Fed outcome.

The emerging market equity and bond funds tracked by EPFR
took in a combined $3.4 billion, slowing from the $5.8 billion
they took in the previous week. [ID:nSGE69S047]

U.S. crude oil (CLc1: ) lost around 1 percent to $81.38 a

Bund futures (FGBLc1: ) rose 33 ticks.


The dollar fell as low as 80.54 yen (JPY=: ), within a yen of
a record low of 79.75 set in 1995.

The dollar (.DXY: ) rose 0.5 percent against a basket of major
currencies. The dollar has shed about 7 percent in the past two
months, and some analysts say it is due for a rally once the Fed
reveals its easing plans.

Market expectations have centred on an initial commitment to
buy at least $500 billion in Treasury debt over five months to
spur lending and support an economic recovery that is too weak
to tame high unemployment.

Further muddying the outlook, Fed officials have offered
conflicting signals on their policy predilections in recent
weeks, with some pushing for very aggressive stimulus and others
highly sceptical of any additional accommodation.

“The second-guessing continues, with some suggesting the Fed
will try to avoid a major disappointment and thus will deliver
whatever the market is looking for,” BNP Paribas said in a note
to clients.

“We concur, favouring a slow-release $500 billion over six
months, albeit perhaps with an open-ended promise of more to
come if warranted. This should be dollar-supportive.”
(Editing by Hugh Lawson)

GLOBAL MARKETS-Fed QE guessing game weighs on world stocks