* Dollar dips ahead of Fed rate decision
* Crude oil resumes falling, cools risk appetite
* Europe slides despite late recovery in China stocks
* Wall Street expected to start 0.5 pct lower
* Markets await any hints of dovishness from Fed's statement
By Marc Jones
LONDON, Jan 27 (Reuters) - European stocks succumbed to
another slide in oil prices on Wednesday as markets waited
cautiously to see what the Federal Reserve's reaction will be to
what has been a brutal start to the year for world markets.
Asian and particularly Chinese bourses .CSI300 ended
stronger than they started but that could not prevent the
pan-European FTSEurofirst 300 .FTEU3 falling just over 0.7
percent ahead of what were expected to be similar falls on Wall
Street. EU. ESc1
There was still some grogginess after gadget giant Apple
AAPL.O forecast its first revenue drop in 13 years on Tuesday,
but the main pressure was once again from oil which sank back
towards $30 a barrel following its latest attempt at a bounce.
Brent was down 2 percent at $31.12 per barrel with U.S.
crude CLc1 3.3 percent lower at $30.40. Currencies followed a
now familiar dance, with the dollar down against the yen JPY= ,
although it gained less than usual against oil-linked peers like
the rouble RUB= .
Bond markets were firmly focused on the Fed's post-meeting
statement, due at 1900 GMT. After the rocky start to 2016 Fed
followers are now expecting only one more rate hike this year
rather than the four Janet Yellen and her colleagues were
suggesting in December.
"(Markets are) pretty much treading water ahead of the FOMC
(Federal Reserve)," said Societe Generale (PA:SOGN) strategist Alvin Tan.
"We are expecting a somewhat more dovish tone considering the
turbulence in global markets since the start of the year."
U.S. Treasury yields nudged up, with the benchmark 10-year
Treasury note yield US10YT=RR tip-toeing back above 2 percent
as the more interest-rate-sensitive two-year yield hovered at
0.8567 percent.
Yields were also a touch firmer in Germany, but lower in
southern Europe as small rises in French consumer and industry
confidence and Italian retail sales did little to
alter expectations that the European Central Bank is readying to
cut its interest rates again.
Italian bonds were given an extra boost by an accord between
the country and the European Commission to help Italian lenders
shed some of their 200 billion euros of bad loans. GVD/EUR
Monte dei Paschi, the world's oldest bank, saw its shares,
which have lost more than half their value since the end of
2015, jump as much as 5 percent BMPS.MI .
"Now we have this agreement, the risk of an Italian banking
crisis has eased," said DZ Bank strategist Daniel Lenz.
OIL SPILL
There was little in the way of U.S. data on the slate ahead
of the Fed later, although there was a slew of fresh company
results to digest. .N
No. 2 U.S. wireless carrier AT&T (N:T) T.N was down 2.4 percent
in pre-market deals after below estimate revenues, while
TripAdvisor TRIP.O took a 5.5 percent flight south after
Goldman Sachs (N:GS) cut its rating on the stock to "sell".
Overnight, a late rally in China reversed an early 3 percent
drop and helped MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS finish 0.5 percent higher.
Tokyo's Nikkei .N225 closed up 2.7 percent and the
Australian dollar AUD= rose after one measure of inflation
came in slightly above forecasts. FRX/
Valuations have taken a beating in Asia this year.
The benchmark Hong Kong stock market index is now trading at
a price-to-earnings multiple of 7.4 times, its lowest since the
2008 crisis, while the China enterprises index is at a multiple
of less than 6 times, its cheapest since December 2001.
"The Hang Seng China Enterprises index is currently priced
for a credit event, which we think is slightly extreme," said
Michelle Leung, CEO of Xingtai Capital Management, a hedge fund
focused on Chinese consumer stocks.
The retreat in oil prices in Europe also began to weigh on
other commodity markets. Copper, which is seen as highly attuned
to global growth, sagged to $4,525 tonne CMCU3 by 0704 GMT,
after a 2.7 percent gain in the previous session.
Traditional safe-haven gold meanwhile hovered near a 12-week
high at 1,117 an ounce XAU= .
"The world's economic condition doesn't seem to give the Fed
reason to hike rates soon given the growth risks," said Barnabas
Gan, analyst at OCBC Bank in Singapore.
(Editing by Catherine Evans)