* Global stocks down 0.6 pct at 281.46
* European shares hit four-week lows, banking worries weigh
* Dollar muted, Fed starts two-day meeting
By Carolyn Cohn
LONDON, Nov 3 (Reuters) - World stocks dipped towards the
previous session's four-week lows on Tuesday as investors
continued to fret over the early removal of government stimulus,
particularly in the financial sector.
Positive U.S. manufacturing and home sales data buoyed U.S.
stocks on Monday but investors worry that signs of recovery will
lead governments to cut economic and fiscal support, a fear that
has contributed to a reversal of equities' seven-month rally.
CIT Group INC <CIT.N>, a U.S. lender to hundreds and
thousands of small and medium-sized businesses, filed for
bankruptcy on Sunday, underscoring the continuing fragility of
parts of the financial sector.
European shares hit four-week lows as poor results from
Swiss bank UBS <UBSN.VX> and a shake-up of UK banks Lloyds and
Royal Bank of Scotland <RBS.L> rattled investors.[]
Lloyds launched a record 13.5 billion pound ($22 billion)
rights issue and along with RBS agreed to sell off businesses as
part of a complex deal to limit reliance on government support.
[]
"UBS just posted ugly results that bode ill for European
bank results and CIT just filed for bankruptcy. This raises the
question: isn't it too early to pay back government money?" said
David Thebault, head of quantitative sales trading at Global
Equities in Paris.
World stocks as measured by MSCI <.MIWD00000PUS> fell 0.6
percent to 281.32. The index rallied by 75 percent between early
March and late Oct on growing optimism over the global economy,
but fell 4 percent last week.
The FTSEurofirst 300 <> index of top European shares
fell 1.5 percent to a four-week low, losing ground for the sixth
time in nine sessions. Riskier emerging market shares <.MSCIEF>
fell 1.0 percent.
ACTION-PACKED WEEK
The dollar edged up against the euro <EUR=> but fell 0.4
percent against the yen <JPY=>. Currency markets are likely to
trade cautiously ahead of a raft of key events this week.
The Federal Reserve starts a two-day meeting on interest
rates on Tuesday, the European Central Bank and Bank of England
make rate decisions on Thursday, U.S. employment data is due on
Friday and G20 finance ministers meet in St Andrews, Scotland,
this weekend.
The Fed is not expected to depart from a policy of
maintaining low rates for an extended period of time but it
could discuss how to prepare markets for an eventual policy
shift.
The ECB and BoE are expected to keep rates on hold but the
UK central bank may decide to pump yet more money into the
economy.
The Australian dollar <AUD=> fell nearly 1 percent after the
Australian central bank raised rates on Tuesday for a second
consecutive month, to 3.5 percent.
Investors are becoming more tentative about markets going
into the final two months of the year.
"We are inclined toward slightly more caution on the
evolving global economic dataflow, at least as far as the next
three to four weeks are concerned," said analysts at UBS in a
client note.
Oil slipped 0.5 percent below $78 a barrel <CLc1> but gold
<XAU=> was boosted by news the International Monetary Fund had
sold 200 tonnes of gold to the Reserve Bank of India for $6.8
billion, half of a long-planned sale that threatened to slow the
precious metal's rally. []
Euro zone government bonds benefited from the fall in
European stocks. The December Bund future <FGBLc1> rose 15 ticks
to 122.06.
(Editing by Mike Peacock)
