GLOBAL MARKETS-Stocks hesitant in Asia, with a lot riding on Fed decision

By Wayne Cole and Amanda Cooper

SYDNEY/LONDON, Sept 15 (Reuters) - Global shares traded steadily near record highs on Monday ahead of an action-packed week that looks certain to see the U.S. Federal Reserve resume its easing cycle, and perhaps leave the door wide open to a series of cuts.

The Bank of Canada is also expected to cut rates by a quarter point this week, while the Bank of Japan and the Bank of England are both expected to hold rates steady.

MSCI's all-country index .MIWD00000PUS hovered just shy of last week's record highs, while stocks in Europe .STOXX rose 0.3% and S&P 500 futures ESc1 and Nasdaq futures NQc1 were both steady.

Markets are 100% priced for an easing of 25 basis points from the Fed, taking its funds rate to 4.0-4.25%, with futures implying just a 4% chance of 50 basis points. 0#USDIRPR

Just as important will be Fed members' "dot plot" projections for rates and guidance from Fed Chair Jerome Powell on the extent and pace of any further easing.

Futures already have 125 basis points of cuts priced in by late 2026, so anything less than dovish will disappoint investors.

"The key question for the September FOMC meeting is whether the Committee will signal that this is likely the first in a series of consecutive cuts," said David Mericle, chief U.S. economist at Goldman Sachs.

"We expect the statement to acknowledge the softening in the labor market but do not expect a change to the policy guidance or a nod to an October cut."

U.S. President Donald Trump continued his attacks on the central bank on Sunday, saying Powell was incompetent and hurting the housing market.

"Uncertainty surrounding the future path for Fed policy means that some traders are now bracing for volatility around Wednesday’s Fed decision, with options markets pricing in a 1% swing in either direction, which would be one of the biggest daily moves in weeks," XTB research director Kathleen Brooks said.

Meanwhile, the euro offered little reaction to Fitch's downgrade of France.

The single currency edged up 0.1% to $1.1738 EUR=EBS, a short way from its recent top of $1.1780. It was a touch weaker against sterling, trading at 86.33 pence, down 0.2% on the day EURGBP=D3.

The euro has been underpinned by a steady outlook for EU rates, with the European Central Bank signalling last week it was in a "good place" on policy. A host of ECB officials are due to speak this week, including President Christine Lagarde.

Elsewhere, the dollar eased 0.2% against the yen to 147.42 JPY=EBS, while the Norwegian crown rose to multi-month highs against the euro EURNOK=D3 and to a 2023 high against the dollar NOK=D3 ahead of the Norges Bank policy meeting later this week.

CHINA DATA MISSES

In Asian markets, Chinese blue-chip shares .CSI300 rose 0.2%, as did Hong Kong's Hang Seng index .HIS as investors redoubled bets on Chinese tech shares amid Sino-U.S. trade talks.

Talks between U.S. and Chinese officials on their strained trade ties on Monday entered a second day in Madrid. Trump said he was still negotiating on the divestiture deadline for Chinese short-video app TikTok.

Data released on Monday showed the Chinese economy lost some momentum in August, with a slew of activity indicators - from industrial output to retail sales - coming below forecasts. Falls in property investment deepened, while home prices declined another 0.3% in August, extending a downward trend that has persisted since early 2023.

"Given the slowdown of the past few months, we expect that there's a strong case for additional short-term stimulus efforts," said Lynn Song, ING's chief economist, Greater China.

"We continue to see a high possibility for another 10bp rate cut and 50bp reserve-requirement-ratio cut in the coming weeks."

In the commodities market, oil prices extended gains as investors assessed the impact of Ukrainian drone attacks on Russian refineries that could disrupt its crude and fuel exports.

Brent crude LCOc1 rose 0.5% to $67.33 a barrel. Gold, meanwhile, was steady at $3,642 an ounce XAU=, just below last week's all-time high of $3,673.95.

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