* Europe shares fall, dampened by miners, VW
* Copper drops on China demand uncertainty
* U.S. index futures signal lower open on Wall St
* Dollar touches near two-week high on rates outlook
* German Bund yields hit one-month low
By Nigel Stephenson
LONDON, Sept 22 (Reuters) - Shares slid on Tuesday, with
Europe led lower by mining companies as copper prices fell on
worries over Chinese demand, while the dollar rose to its
highest in almost two weeks after Federal Reserve officials
signalled U.S. interest rates might rise this year.
The pan-European FTSEurofirst 300 stocks index .FTEU3 fell
2.6 percent, reversing a trend that had seen stocks rise in
Asia. Wall Street was expected to open lower, according to index
futures ESc1 .
An index of Europe-listed mining shares .SXPP dropped 5.6
percent after copper CMCU3 retreated 2.5 percent.
Worries over a slowdown in the Chinese economy have weighed
on markets in recent weeks, and preliminary factory activity
data for September will be a focus for investors on Wednesday.
"If China manufacturing numbers come in better than expected
tomorrow, we could see a rebound in mining stocks for some days,
but the sector's medium-term outlook remains bearish," Christian
Stocker, equity strategist at UniCredit in Munich.
A further fall in shares of German carmaker Volkswagen (XETRA:VOWG)
VOWG_p.DE , which has admitted cheating on vehicle emission
tests, also took a toll on the FTSEurofirst, as an investigation
of the cheating spread to Asia. VW shares were last down 19
percent. Porsche PSHG_p.DE , part of the VW group, lost 17
percent.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gave up earlier gains and was last down 0.3
percent.
Chinese shares rose, with the Shanghai Composite .SSEC and
the CSI300 index .CSI300 of the largest listed companies in
Shanghai and Shenzhen both closing up about 0.9 percent.
Japanese markets were closed for a holiday.
Weakness in stock markets helped lift the yen against the
dollar, though the divergence between the Fed on the one hand
and the ECB and Bank of Japan on the other helped push the
dollar to its highest since Sept. 10 against a basket of
currencies .DXY .
The U.S. Federal Reserve held policy steady last week,
citing risks to global growth. But Atlanta Fed President Dennis
Lockhart said on Monday he still expected rates to rise this
year and St. Louis Fed chief James Bullard said there was a
chance of a hike next month.
By contrast, European Central Bank officials have been
stressing monetary policy in the euro zone will remain loose for
some time. Governing Council member Ewald Nowotny said on Monday
ECB rates would stay low as long as growth did.
The euro EUR= was down 0.2 percent at $1.1155, having hit
a high of $1.1459 on Friday. The dollar eased 0.5 percent to
119.96 yen JPY= per dollar but was still above Friday lows.
Expectations of a prolonged period of low ECB rates, and the
fall in stocks, pushed down yields on low-risk euro zone debt.
German 10-year Bund DE10YT=TWEB yields hit a one-month low at
0.62 percent, down 6 basis points on the day.
The ECB launched a trillion-euro bond buying programme in
March, but has failed to raise the market's long-term inflation
expectations.
"I'm not too convinced that they are signalling they are
ready to do something in October, but it does support our view
that if nothing changes between now and December, the ECB may
have to add more stimulus," said Elwin de Groot, senior market
economist at Rabobank.
Oil prices fell as concern over global growth weakened the
outlook for demand and as traders took profits from a rise of 3
to 4 percent on Monday.
Brent crude, the global benchmark, was down 79 cents a
barrel at $48.13. Gold XAU= eased with stocks and commodities.
It last traded at $1,128.40 an ounce.