GLOBAL MARKETS-Dollar eases, gold hits peak as markets await Fed

                                
 * Markets await Federal Reserve meeting on Tuesday
                                
 * Gold hits all-time high as U.S. consumer morale sags
                                
 * Equity markets edge higher, Indian shares at 32-mth peak
                                
 * Yuan rises for eighth day
                                
 By Alex Richardson
                                
 SINGAPORE, Sept 20 (Reuters) - The dollar edged down and
gold hit a record high on Monday as possible further Federal
Reserve moves to increase money supply weighed on the U.S.
currency and boosted alternative assets.
                                
 Uncertainty about the global economic recovery, fuelled by
weak U.S. consumer sentiment data on Friday, and a public
holiday in Japan also kept many investors sidelined, with oil
steady after a drop last week while Asian equities eked out
small gains.
                                
 European shares ended a four-session losing run, with the
FTSEurofirst <.FTEU3> and Germany's DAX <.GDAXI> rising 0.3
percent in early trade, while Britain's FTSE 100 <.FTSE> and
France's CAC 40 <.FCHI> gained 0.6 percent. [.L] [.EU]
                                
 "This week will continue to be dominated by concerns about
further Fed easing or stimulus at Tuesday's Federal Reserve
rate meeting, especially given last Friday's disappointing
Michigan consumer sentiment number for September," Michael
Hewson, market analyst at CMC Markets in London, wrote in a
note.
                                
 Japan intervened to sell yen for the first time in six
years last week, partially interrupting a decline in the dollar
that began when talk of further quantitative easing --
effectively printing money -- by the U.S. central bank revived
last month.
                                
 "If the Fed decides to give more hints it is about to
embark on more QE, the U.S. dollar slide will probably
continue," said John Kyriakopoulos, a currency analyst at
National Australia Bank in Sydney.
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 For a preview of Tuesday's Fed meeting, see:
[ID:nN14175842]
                                
 For dollar/yen correlations  http://link.reuters.com/wyn43p
                                
 For PDF on the yen's rise       http://r.reuters.com/zuz33p
                                
 For graphic on intervention  http://link.reuters.com/wym42p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 The Fed is not expected to make any new monetary policy
moves on Tuesday, but the post-meeting statement will be
closely parsed for signals on the debate about whether further
large-scale asset purchases are needed to support the sluggish
recovery.
                                
 Views differ among Fed officials about whether stubbornly
high unemployment merits more aggressive policy intervention.
                                
 Recent data appear to indicate the U.S. economy is not
sliding back into recession as some market watchers had feared,
but investors are wrestling with how to value stocks as the
global recovery loses momentum and sales outlooks grow more
uncertain.
                                
 MSCI's broadest index of Asian shares outside Japan rose
0.4 percent <.MIAPJ0000PUS>, with most equity markets gaining
modestly, although indexes in Hong Kong <.HSI>, Shanghai
<.SSEC> and Australia <.AXJO> slipped.
                                
 Indian shares <.BSESN> were the stand-out performers,
rising 1 percent to a 32-month high on surging foreign
portfolio investment. [.BO]
                                
 BETS AGAINST DOLLAR
                                
 Market sentiment on the major currencies was summed up by
the latest Commodity Futures Trading Commission data. They
showed investors had increased bets against the U.S. dollar to
the highest level in a month, while sharply cutting back net
short positions in the euro and sterling.
                                
 On Monday, the dollar was parked at 85.70 yen <JPY=>,
having spent Friday in a tight 85.57 to 85.92 range as the risk
of further intervention by Tokyo kept investors away. [FRX/]
                                
 China's yuan <CNY=CFXS> recorded its biggest eight-day gain
since January 2008 as the central bank fixed its mid-point at
another post-revaluation high following intense U.S.-led
political pressure. [ID:nSGE68J07U]
                                
 Treasury Secretary Timothy Geithner vowed last week to
rally other world powers to push China for trade and currency
reforms as he was grilled by lawmakers, many of whom believe
China keeps the yuan artificially low to unfairly benefit its
manufacturers.
                                
 Gold <XAU=>, which tends to benefit from economic
uncertainty as it is viewed by many investors as a safe-haven
asset, rose as high as $1,283.25 an ounce, eclipsing the
previous all-time peak of $1,282.75 struck on Friday. [GOL/]
                                
 "For today at least, the market will continue to speculate
on more quantitative easing ahead of the Federal Reserve
meeting on Tuesday, which should provide some support to gold,"
said Ong Yi Ling, an analyst at Philip Futures.
                                
 U.S. crude oil futures <CLc1>, which slipped nearly 4
percent last week, were unchanged at $73.66 a barrel, with many
traders waiting for the Fed's readout on the U.S. economy.
[O/R]
                                
 "If they lower their forecasts as some people are
expecting, oil prices would be pushed down because it implies
lower demand," said Michelle Kwek, an analyst at Informa Global
Markets in Singapore.
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