By Danilo Masoni
MILAN (Reuters) - Markets started cautiously as the concern over global growth that sent world stocks to 17-month lows was only partly tempered by expectations of encouraging messages from the United States and China.
The MSCI world equity index, which tracks shares in 47 countries, was flat by 0947 GMT. Losses in European equities offset modest gains in Asia overnight.
Markets in London, Frankfurt and Paris fell 0.1 to 0.5 percent. U.S. stock futures edged up 0.05 percent.
The Federal Reserve is widely expected to raise U.S. interest rates again at the end of its two-day meeting on Wednesday, but what matters more for investors will be whether it cuts its guidance on rate increases in 2019.
The Fed now projects three more increases before 2020, but recent disappointing data and worries over Washington's protectionist policies have fueled expectations the central bank will cut its guidance.
"A final key rate hike for 2018 is almost a done deal, but what is more important is how the Fed's dot plots shift in 2019 and beyond. If U.S. monetary policymakers are seeing a serious risk of economic slowdown, those dots should be pulled downwards," said FXTM strategist Hussein Sayed.
On Friday, the S&P 500 lost 1.9 percent to 2,599.95, its lowest close since April 2.
In China, where the economy has been losing momentum, investors will be looking to a speech by President Xi Jinping on Tuesday marking the 40th anniversary of China's reforms and opening up.
China is also expected to hold its annual Central Economic Work Conference later this week, where key growth targets and policy goals for 2019 will be discussed.
The top decision-making body of the Communist Party, the Politburo, said last week China will keep its economic growth within a reasonable range next year, striving to support jobs, trade and investment while pushing reforms and curbing risks.
"It's generally assumed that you will need to expand fiscal and monetary support to achieve those goals," said Tokai Tokyo Research strategist Wang Shenshen.
The optimism before Xi's speech helped base metals rise, although weak economic indicators capped gains.
In foreign exchange markets, most currencies were little changed. The dollar paused near 18-month highs before the Fed meeting, after it gained from a rush into safe-haven assets caused by the economic outlook.
"The market appears to be underpricing the Fed, and any indication of additional gradual increases is likely to bring potential dollar upside versus rate-sensitive currencies," Barclays (LON:BARC) strategists wrote in a note.
The dollar slipped 0.07 percent to 97.371 against an index of six major currencies, close to the 19-month high of 97.711 touched last week. The euro nudged up 0.17 percent to $1.1326 after last week falling as low as $1.1270.
Safe-haven gold also fell before the Fed meeting, with spot prices unchanged at $1,238.45 per ounce and U.S. gold futures up 0.06 percent at $1,242.1 per ounce.
The pound traded at $1.2602, above Wednesday's 20-month low of $1.2477 it reached on mounting worries that Britain was headed for a chaotic exit from the European Union.
Prime Minister Theresa May is due to hold a speech in parliament later on Monday. She is set to state her opposition to a second Brexit referendum.
The Mexican peso gained after Mexico's new government avoided major surprises in its closely watched first budget, sticking to fiscal promises made earlier to investors.
The peso rose 0.5 percent to 20.132 on the dollar.
In bond markets, politics also dominated price moves.
The yield spread between Italian bonds and their German equivalents narrowed further on expectations Rome will reach a compromise with Brussels over its 2019 budget. French bonds were hit as "yellow vest" protests rumbled on in Paris over the weekend.
The Italian-German yield spread stood at 270 basis points, above Friday's low of 273.7. French government bond yields rose to 0.717 percent from Friday's close of 0.710 percent.
Oil prices steadied after slipping by around 2 percent last week, but remained under pressure from oversupply and concern over the prospects for global economic growth and fuel demand.
Brent crude oil was up 0.05 percent at $60.29 per barrel. U.S. light crude was unchanged at $51.21.
(This version of the story has been refiled to re-insert the missing space in eighth paragraph)