GLOBAL MARKETS-Shares rally, dollar falls ahead of Fed meeting

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(Adds comment, updates prices)
By Elizabeth Howcroft
LONDON, Sept 16 (Reuters) - Shares rose, the dollar fell and
risk appetite was broadly up on Wednesday, as investors waited
for the U.S. Federal Reserve meeting and new economic
projections which will assess the outlook for the world's
largest economy.
Shares had rallied in the previous session after robust
Chinese and U.S. economic data and continued their gains on
Wednesday, after a shaky start to the European session.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was up 0.2% at 1122 GMT, its fourth
consecutive day of gains, while MSCI's main European Index
.MSER was up 0.1%.
The pan-European Stoxx 600 .STOXX rose around 0.4%, pushed
up by gains in retail stocks, while other European indexes were
more mixed.
U.S. stock futures rose, as investors hoped that the Fed
would pledge to keep interest rates low for a prolonged period.
The Fed will give a statement at 1800 GMT, after its policy
meeting, which will be the first since it announced that it
would pursue average inflation targeting.
Investors will be looking for details about how the changed
approach will affect monetary policy, but Commerzbank's Head of
FX and commodity research, Ulrich Leuchtmann, said anyone
expecting a big change in strategy would be disappointed.
"I think we will see only a relatively mild change in the
actual communications," he said of Wednesday's meeting.
"We will probably see over time how this new strategy
translates into actual monetary policy actions ... frankly I
think that both sides who expect the big changes in the
strategy, or nothing, will be somehow disappointed."
Although the economic projections are expected to be
somewhat improved from the last round of forecasts in June, Fed
Chair Jerome Powell is expected to stick to his message that the
road to recovery will be long and uncertain. "While acknowledging the more rapid improvement in the
economic backdrop, we expect the message to remain one of
caution," wrote RBC Capital Markets analysts in a note to
clients.
"There is no upside for the committee to be positive at this
juncture."
Investors will also be watching for U.S. retail sales data
for August, due at 1230 GMT and expected to show a robust
increase.
The yen rose overnight and extended gains to hit nearly
seven-week high of 104.995 to the U.S. dollar around 1108 GMT
JPY=EBS , as investors sought safer assets. The dollar fell against a basket of currencies, and was at
92.879 at 1132 GMT, down 0.3% on the day =USD . The euro was up 0.2% at $1.18635 EUR=EBS .
Highly rated euro zone government bond yields fell by 1 to 3
basis points, with the benchmark German 10-year Bund yield at
-0.495% DE10YT=RR . Oil prices rose for a second day in a row, with U.S. crude
oil CLc1 hitting one-week highs, up 2.1% at $39.09 a barrel at
1134 GMT. Gold prices rose, up 0.4% at $1962.66 an ounce at 1134 GMT
XAU= . London's FTSE 100 lagged other European indexes, falling
0.3% .FTSE , but the struggling pound was propped up by a
weaker dollar. UK inflation dropped to its lowest rate in almost five years
last month, led by a large reduction in prices for eating out
under a government subsidy scheme. As the British government pushes ahead with legislation that
would breach the Brexit Withdrawal Agreement signed in January,
the European Commission said that chances of reaching a trade
deal are fading every day. Elsewhere, the World Trade Organization ruled that the
United States breached global trade rules with the
multibillion-dollar tariffs it imposed during its trade war with
China.
The decision had limited market impact as it is only the
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Emerging markets http://tmsnrt.rs/2ihRugV
World stocks https://tmsnrt.rs/2ZGEBBE
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(Editing by Catherine Evans)