* Federal Reserve meeting eyed for any extra stimulus
* Gold hits all-time high on U.S. economy worries
* Dollar eases against currency basket
By Emelia Sithole-Matarise
LONDON, Sept 20 (Reuters) - The dollar slipped and gold hit
a record high on Monday as the possibility the Federal Reserve
could signal further economic stimulus spurred demand for
alternative assets.
European shares ended a four-session losing run, with the
FTSEurofirst <> advancing by 0.7 percent as equity
investors pushed aside for now concerns about Ireland's shaky
banking sector which rocked markets on Friday.[]
The Fed is not expected to make any new monetary policy
moves on Tuesday, but the post-meeting statement will be closely
scrutinised for signals on the debate about whether further
large-scale asset purchases are needed to support the sluggish
recovery.
"There is plenty of pressure on the Fed to put forward what
they are going to do to stop the U.S. going into a double dip
recession. It will be the main focus of the week and the market
could go either way, we expect trading to be quite volatile,"
said Will Hedden, sales trader at IG Index.
By 1020 GMT, the dollar had fallen 0.3 percent against a
basket of currencies, taking the dollar index down to 81.16
<.DXY>, near a five-week low hit last week.
The prospect the U.S. economy may require more quantitative
easing -- often seen as currency-negative -- highlighted
differences in policy outlooks among major central banks, with
the Australian dollar hitting a two-year high on hawkish
comments from the Reserve Bank of Australia. []
"The consensus is that the Fed won't do anything tomorrow,
but if they indicate that more QE may be on the way, it would
send a strong signal to sell the dollar during the week," said
Kasper Kirkegaard, currency strategist at Danske in Copenhagen.
Against the yen, the dollar was down 0.1 percent at 85.63
with investors cautious of taking big yen positions after
Japan's intervention last week.
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 revived last month of the U.S. central bank
opting for further quantitative easing -- effectively printing
money.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a preview of Tuesday's Fed meeting, see: []
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
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Gold <XAU=>, which tends to benefit from economic
uncertainty because many investors see it 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. []
World stocks as measured by the MSCI world equity index
<.MIWD00000PUS> added 0.4 percent while the Thomson Reuters
global stock index <.TRXFLDGLPU> gained 0.3 percent, lifted by
the gains in European stocks.
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.
Uncertainty about the global economic recovery, fuelled by
weak U.S. consumer sentiment data on Friday, and a public
holiday in Japan also kept some investors sidelined, with oil
steady after a drop last week while Asian equities eked out
small gains.
U.S. crude oil futures <CLc1>, which slipped almost 4
percent last week, were little changed around $73.92 a barrel,
with many traders waiting for the Fed's readout on the U.S.
economy. []
(Additional reporting by Naomi Tajitsu and Joanne Frearson;
Editing by Ruth Pitchford)
