World stocks held steady above this month's one-year low on Wednesday and the euro also stabilized as investors looked to the Federal Reserve to announce steps to guide long-term U.S. interest rates lower to help the economy.
Persistent concerns about a possible default on Greek sovereign debt limited any excitement ahead of the Fed, with Greece and international lenders yet to reach a deal to give Athens more loans despite some progress.
The Fed is expected to announce at 1815 GMT plans to rebalance its portfolio in favor of longer-dated bonds and so push long-term interest rates -- already near historic lows -- even lower in a move known as Operation Twist.
However, it is not clear how effective the Fed's new measures would be in significantly bolstering growth, given that the economy is still slowing down after its $600 billion bond buying program that ended in June.
"The market expects that the Fed will come up with some new plans to stimulate the economy. Investors will be extremely disappointed if the Fed does not announce a plan to rebalance its portfolio," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"But if it does, we might see limited reaction as it is already priced in."
The MSCI world equity index .MIWD00000PUS was down 0.2 percent on the day, staying around 4 percent above its one-year low set earlier in September.
European stocks markets fell 0.5 percent while emerging stocks .MSCIEF lost 0.3 percent on the day.
U.S. crude oil lost 0.4 percent to $86.60 a barrel.
Bund futures were down 4 ticks ahead of a closely-watched sale of 5 billion euros of German 10-year Bunds, which will test investor demand for safe-haven assets.
"The strength of today's Bund auction will indicate whether sub-2 percent yields are sustainable or whether more bad news is required," Credit Agricole said.
The euro zone debt crisis is likely to stay on investors minds after Italy's credit rating downgrade increased strains on European banks.
The Greek government will make announcements later on Wednesday on austerity measures it is discussing with its international lenders to save the country from bankruptcy.
The dollar fell as low as 76.10 yen, close to record lows, ahead of Japan's fiscal half-year end, which encouraged some investors to unwind their U.S. fixed income assets and repatriate gains.
The dollar .DXY rose 0.1 percent against a basket of major currencies.
The euro lost 0.1 percent to $1.3681, but staying above its seven-month low below $1.35 set on September 12.
Investors are also awaiting a meeting of finance ministers from the BRIC emerging nations -- Brazil, Russia, India and China -- in Washington this week after Brazil said it was willing to pump in $10 billion through the IMF to help Europe.
read more: Olympus Wealth Management
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