World stocks fall ahead of US central bank meeting

Global shares fell on Tuesday and the US dollar rose again as investors held their breath ahead of the update on monetary policy due out from the Federal Reserve on Wednesday.

Wall Street ended lower and the yield on the US 10-year rose after US producer prices increased by more than expected in November, another data point to support views that inflation could remain uncomfortably high for some time.

"Markets traded defensively ahead of the Fed tomorrow, with equities, bond yields, oil and gold all lower," Brian Martin, head of research at ANZ bank, wrote in a note to investors.

The Federal Reserve is expected on Wednesday to announce that it is speeding up the end of its pandemic-era bond purchases and signal a turn to interest rate increases next year as a guard against surging inflation. Several central banks meet this week, starting on Tuesday when the Federal Reserve convenes for its two-day event, followed by the European Central Bank on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday.

While some investors are sitting on the sidelines, reluctant to take on new positions before year-end, others continue to be happy to  "buy the dip," a strategy that has been successful throughout 2021's strong rally, said Benjamin Bowler, equity analyst at Bank of America.