Equities were flat while major currencies and commodities traded within recent ranges on Wednesday as investors awaited a statement from the U.S. Federal Reserve that they hope will shed light on its next move.
The Fed is expected to leave policy ultra-loose following the central bank's meeting that ends later on Wednesday but may hint it will start scaling back its bond buying later this year if the U.S. labor market continues to improve.
Fed Chairman Ben Bernanke's comment last month that the U.S. central bank could begin to curtail bond purchases at one of its "next few meetings" put up a speed bump for the equity rally and pushed bond yields higher.
U.S. and European stocks were slightly lower by late morning. The MSCI world equity index, tracking shares in 45 countries, inched up 0.04 percent, while Tokyo's Nikkei index ended up 1.8 percent. U.S. Treasuries prices turned negative with yields rising to session highs.
"The early morning action is not surprising given the fact that we've had two days of position jockeying ahead of the FOMC announcement," said Andre Bakhos, director of market analytics at Lek Securities in New York.
The policy-setting Federal Open Market Committee will announce its decision at 2:00 p.m. EDT (1800 GMT), followed 30 minutes later by a news conference with Bernanke.
Speculation about when and by how much the Fed could start to trim its bond purchases of $85 billion a month has supported the dollar against emerging and growth-linked currencies, although uncertainty over the impact of any policy shift has led some investors to prefer the yen or the euro.
The Dow Jones industrial average dipped 18.52 points, or 0.12 percent, to 15,299.71. The Standard & Poor's 500 Index was off 1.89 points, or 0.11 percent, to 1,649.92. The Nasdaq Composite Index gave up 2.87 points, or 0.08 percent, at 3,479.31.
Europe's broad FTSEurofirst 300 index slipped 0.2 percent. The dollar shed 0.3 percent against the Japanese currency on Wednesday to trade around 95.08 yen. But it was little changed against the euro at $1.34 after the single currency touched a four-month high on Tuesday.
"I think the market is a bit ahead of itself on the tapering story," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
"It's going to be quiet going into it, then I think it will turn very volatile in the U.S. afternoon following the Fed statement and the press conference," he said. "People generally lack much conviction about the near-term direction and how the markets respond to the Fed."
Against a basket of major currencies the greenback was holding steady at around 80.551.
_0">Benchmark 10-year Treasuries were last off 5/32 in price to yield 2.20 percent. The 30-year bond was 3/32 lower in price with a yield of 3.35 percent
Trading could get choppy in equity markets, where many major indexes have hit new records this year due to the liquidity injections from major central banks, which has made them vulnerable to any scaling back in the flow of funds from the Fed. The benchmark S&P 500 is up more than 15 percent since the start of the year.
A drop in U.S. oil reserves gave some support to oil prices but the Fed was still the main focus. Brent crude slipped 7 cents to $105.95 a barrel, and U.S. crude for July delivery gave up 21 cents $98.23.
_4">Gold edged up, with spot gold up 0.4 percent at $1,373.90 an ounce, while U.S. gold futures rose $6.70 an ounce to $1,373.60.
_5">