​China weighs on global markets ahead of Fed statement

An investor checks her mobile phone next to an electronic board at a brokerage house in Shanghai on Jan. 27, 2016.

JOHANNES EISELE/AFP/Getty Images

LONDON - Another big reverse on China's main stock index weighed on markets around the world Wednesday ahead of the latest policy statement from the U.S. Federal Reserve.

In Europe, France's CAC-40 was down 0.6 percent at 4,333 while Germany's DAX fell 0.6 percent to 9,762. Britain's FTSE 100 was 0.4 percent lower at 5,889.

Wall Street looked set for a lower open, with Dow futures down 0.3 percent, and the broader S&P 500 0.5 percent lower.

How the U.S. markets actually fare could well hinge on the statement from the Fed following the conclusion of its latest meeting. The U.S. central bank raised rates last month for the first time in nearly a decade following a raft of upbeat economic data, notably with regard to jobs. But the recent strength of the dollar, low oil prices and jitters over China's outlook have prompted warnings against raising rates too fast.

"Fed-watchers will be examining the statement for signs of a shift in tone that might confirm the markets' recent lowering of expectations of the trajectory of U.S. rate increases during the course of 2016," said Neil MacKinnon, global macro strategist at VTB Capital.

The foreign exchange markets could well see the biggest moves after the Fed's statement. Ahead of it, trading was subdued, with the euro up 0.1 percent at $1.0874 and the dollar flat at 118.33 yen.

The Shanghai Composite Index fell 4 percent by midday before recovering to end down 0.5 percent at 2,735.56, adding to Tuesday's 6.4 percent loss. Japan's Nikkei 225 rose 2.7 percent to 17,163.92 and Hong Kong's Hang Seng was up 1 percent at 19,052.45. South Korea's Kospi gained 1.4 percent to 1,897.87.

Oil prices were sliding again, more or less reversing the previous day's gains. Benchmark U.S. crude was down $1.06 at $30.39 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the benchmark for international oils, fell 60 cents to $31.20 per barrel in London.