Most European stocks retreated as signs of caution started to show in markets before this week's packed schedule of events, which includes a U.S. interest rate decision. The pound tumbled as the British Prime Minister won permission to trigger the country's departure from the EU.
The Stoxx Europe 600 Index headed for the first decline in five days as every industry except healthcare traded in the red. Sterling dropped to the lowest since mid-January as parliament paved the way for Theresa May to begin talks with the European Union over Britain's exit. India's NSE Nifty 50 Index surged to a record and the rupee climbed to an 11-month high after Prime Minister Narendra Modi's victory in state elections. The yield on 10-year Treasuries remained near the highest level of the year and oil fluctuated after declining for six straight days.
Expectations the Federal Reserve will raise borrowing costs at a faster pace than was expected at the start of this year have surged as data globally pointed to firming growth and accelerating inflation. The question for most traders now is how fast the Fed will move, and they'll be scouring the statement and any comments accompanying Wednesday's expected quarter-point increase for clues.
"The market is waiting," said Peter Schaffrik, global macro strategist at RBC Europe Ltd. "Moves today have been fairly muted. The Fed is clearly on everyone's mind. The rate hike is a foregone conclusion, so it's the press conference that's really relevant."
What's on the watch list this week:
The Fed's quarter-point increase is expected on Wednesday.
The Bank of England, Swiss National Bank, Bank of Japan and Bank Indonesia are expected to keep monetary policies unchanged on Thursday.
The Netherlands' will go to the polls on March 15.
G20 finance ministers will gather in Germany for a series of meetings.
Here are the main market moves:
India's NSE Nifty 50 Index surged 1.7 per cent as the market reopened after a public holiday. Prime Minister Narendra Modi's victory boosted expectations for a continuation of his reform agenda.
Chinese shares traded in Hong Kong climbed 0.6 per cent after surging 1.9 per cent on Monday. Data on industrial production and retail sales showed China's economy started the year on a firm footing.
The Bloomberg Dollar Spot Index gained 0.2 per cent at 9:55 a.m. in London, up for a second day.
The British pound led losses, weakening by as much as 0.9 per cent before trading 0.8 per cent lower.
The euro slipped 0.1 per cent to $1.0639, following a 0.2 per cent drop Monday.
The Stoxx Europe 600 Index fell 0.2 per cent. Banking stocks retreated, with the sector index falling 0.7 per cent following recent sharp gains made in the wake of the ECB's meeting last week.
The U.K.'s FTSE 100 slightly outperformed overall, gaining 0.2 per cent as the pound dropped.
Futures on the S&P 500 Index slipped 0.1 per cent after the benchmark gauge ended Monday virtually unchanged.
German bonds opened lower, weighed by a late slide in U.S. Treasuries, attributed to large corporate issuance. German 10-year yields broke above 0.5 per cent before recovering.
Peripheral bonds are steady. The Netherlands is selling €2.275-billion in five-year bonds ahead of tomorrow's parliamentary elections.
Oil traded near a three-month low as U.S. crude stockpiles were seen rising for a 10th week, but West Texas Intermediate managed to add 0.4 per cent to $48.61 a barrel.
Aluminum led a decline in industrial metals, falling 0.5 per cent to $1,871.50 a metric ton as China, the largest producer, increased output to a record.
Gold was little changed at $1,203.72 an ounce as investors prepared to assess the tone of the Fed's commentary.