Bombay Durpun - European stocks rebound, Wall Street sinks as Fed meets

The Dow shed 1.0 percent at the opening bell, while the broader S&P 500 fell 1.4 percent and the tech-heavy Nasdaq slumped 1.6 percent as investors brace for Fed plans to wind down its cheap money policies.

In a white-knuckle session on Monday, Wall Street stocks tumbled to multi-month lows on interest rate worries and the prospect of a Russian invasion of Ukraine, before staging a feverish comeback to close with modest gains.

"Notwithstanding yesterday's huge intraday reversal -- one of the largest ever for the Nasdaq -- the stock market isn't necessarily in a celebratory mood," said Patrick O'Hare, analyst at Briefing.com.

"If buyers fail to show up to stem the tide of selling ... at the open, it could end up being an unruly day that is as unsettling as yesterday's was before the reversal," he added.

European stocks rebounded on Tuesday, shrugging off losses in Asia, with London rising 0.8 percent, Frankfurt adding 0.6 percent and Paris climbing 1.0 percent.

"It's been a rollercoaster start to what was always going to be a massive week in the markets and there's little reason to expect that to change in the coming days," said market analyst Craig Erlam at trading platform OANDA.

World oil prices also advanced while the dollar mostly strengthened.

All attention is now on the Fed's gathering that concludes Wednesday, with investors poring over every word from the bank's statement and boss Jerome Powell's subsequent news conference.

- Fears of new sell-off -

"Investors' hands are already shaking after the bloodbath in equity markets so far in 2022, so that any aggressive moves by the Fed could cause a further sell-off among global shares," said AJ Bell investment director Russ Mould.

"The central bank is fully aware it needs to act carefully, but equally it is unlikely to sit on hands given the inflationary pressures that need addressing."

After spending much of last year playing down the spike in prices, the US central bank has in recent months taken a sharp hawkish turn on monetary policy as officials look to bring inflation -- which is at a four-decade high -- under control.

The International Monetary Fund said Tuesday that inflation is projected to last longer than previously expected as it trimmed its global growth forecast.

Minutes from the most recent Fed meeting indicate it will begin lifting interest rates from March with three or possibly four more hikes before the end of the year.

On top of that, it plans to start offloading its vast bond holdings.

But while the move to battle runaway prices is seen as crucial, the end of the era of ultra-cheap cash for investors has rattled markets after almost two years of uninterrupted gains to record or multi-month highs.

"Volatility is likely to prevail for the moment," noted Interactive Investor analyst Richard Hunter.

Heightened concern about Russia's troop build-up on Ukraine's border has also weighed on investor sentiment.

- Key figures around 1430 GMT -

London - FTSE 100: UP 0.8 percent at 7,356.52 points

Paris - CAC 40: UP 1.0 percent at 6,854.80

Frankfurt - DAX: UP 0.6 percent at 15,104.12

EURO STOXX 50: UP 0.7 percent at 4,081.99

New York - Dow: DOWN 1.0 percent at 34,021.65

Tokyo - Nikkei 225: DOWN 1.7 percent at 27,131.34 (close)

Hong Kong - Hang Seng Index: DOWN 1.7 percent at 24,243.61 (close)

Shanghai - Composite: DOWN 2.6 percent at 3,433.06 (close)

Euro/dollar: DOWN at $1.1268 from $1.1326 late Monday

Pound/dollar: DOWN at $1.3470 from $1.3488

Euro/pound: DOWN at 83.66 pence from 83.97 pence

Dollar/yen: UP at 113.87 yen from 113.95 yen

Brent North Sea crude: UP 0.6 percent at $86.80 per barrel

West Texas Intermediate: UP 0.4 percent at $83.62 per barrel

burs-rl/lth

V.Handa--BD