Markets waver before rate decisions

Investors are bracing for interest rate decisions by the Federal Reserve, Bank of England and European Central Bank this week. ©AFP

London (AFP) - Global stock markets diverged Monday as traders struggled to maintain momentum from last week's gains.

Shanghai and Tokyo rose as mainland Chinese markets reopened from holidays, while European indices mostly fell ahead of interest rate decisions by major central banks this week.

London flatlined amid a collapse in the share price of online betting firm 888.

The US Federal Reserve is forecast Wednesday to lift interest rates by just 25 basis points, down from a half-point hike last month, which followed four straight 75-point increases.

The Bank of England and the European Central Bank will then unveil their latest decisions one day later, with more hikes on the radar.

"Stocks were on the back foot ...as attention shifts to this week's vital Federal Reserve meeting, as well as supporting acts in the shape of ECB and BoE," said Markets.com analyst Neil Wilson.

Even a strong Wall Street performance was not enough to lift sentiment, after data showed the Fed's preferred inflation gauge rose in December at its slowest pace in more than a year.

The central bank meetings come as a string of recent data suggests that last year's monetary tightening campaign by policymakers was beginning to kick in, with price rises beginning to slow from their multi-decade highs.

There remains trepidation on trading floors that economies could still slip into recession, while a mixed earnings season so far has also caused concern about company profits.

In London on Monday, shares in gambling firm 888 tanked by almost 27 percent after chief executive Itai Pazner resigned amid news of a probe into Middle East operations.

The company added in a statement that it has suspended VIP activities in the region pending the outcome of its internal investigation.

"Gambling stocks are under enough regulatory scrutiny as it is without inviting reasons for further attention and yet that's exactly what 888 has done," said AJ Bell investment director Russ Mould.

"News it is suspending VIP accounts in the Middle East over best practices not being followed over money laundering is incredibly damaging.

"Combine that with the announcement of CEO Itai Pazner's immediate departure and the market is likely to draw its own conclusions," Mould added.

In Asia, Shanghai rose as it resumed trading, though it pared big morning gains, while Tokyo was also up and Taipei piled on more than three percent thanks to a surge in chipmakers.