PARIS, July 30 (Reuters) - European shares ended slightly higher on Tuesday, as a raft of positive results from blue chips such as EDF eclipsed renewed worries over the banking sector fuelled by Barclays' planned rights issue.

  Gains were capped and overall trading volumes were muted, however, as a number of investors moved to the sidelines heading into the U.S. Federal Reserve's policy announcement on Wednesday, expected to shed light on the outlook for the Fed's quantitative easing programme.

  The FTSEurofirst 300 index of top European shares unofficially closed 0.1 percent higher at 1,206.93 points, while the euro zone's blue-chip Euro STOXX 50 index added 0.7 percent at 2,760.45 points.

  " It's not necessarily the indexes that are rising the most, but within indexes, you have big outperformers jumping after reporting forecast-beating results or with a positive tone on their outlook, and this should continue in the next few weeks," said Alain Pitous, deputy CIO of Amundi, which has about 750 billion euros ($994 billion) under management.

  EDF surged 7.3 percent to hit a near two-year high after the French power company lifted its outlook for 2013 core profit.

  Barclays sank 5.9 percent after saying it will have to raise 5.8 billion pounds ($8.9 billion) to plug a larger-than-expected capital shortfall spotted by Britain's financial regulator.

* Mosaic, Potash Corp sink after Russia quits top potash cartel

  * Pfizer earnings, Aetna profit beat expectations

  * Sprint reports wider loss but revenue rises stock up 3 pct

  * Dow up 0.1 pct, S& P 500 up 0.2 pct, Nasdaq up 0.7 pct

  By Alison Griswold

  NEW YORK, July 30 (Reuters) - The S& P 500 rose on Tuesday after earnings from Pfizer and others supported the market, but Mosaic and other potash producers tumbled on expectations of a global price decline.

  Mosaic Co stock was the S& P 500's biggest percentage decliner, falling 20 percent to $42.39 after Russia's Uralkali dismantled one of the world's largest potash partnerships by pulling out of a venture with its partner in Belarus, a move it expects will cause global prices to plummet 25 percent. Mosaic's slide curbed the S& P 500's gain.

  Shares of Pfizer, the largest U.S. drugmaker, rose 0.9 percent to $29.81, helping both the Dow and the S& P 500 advance after the company reported results. Pfizer's second-quarter earnings slightly exceeded estimates as the company lined up a business split that could lead to the spinoff of its generics division.

  Goodyear Tire & Rubber shares surged 10 percent to $18.75 after earlier hitting nearly a five-year high of $19.60 after the company's quarterly profit more than doubled. Goodyear cited lower raw material costs and stabilizing sales in Europe as major reasons for its jump in profits. The stock was among the S& P 500's best performers.

  All three major U.S. stock indexes rose and the S& P 500 came within about 7 points of the 1,700 mark earlier in the session. Seven of the benchmark S& P's 10 industry sector indexes rose, with info tech leading the gains.

  " Earnings are better than fears leading up to the earnings season" had indicated they might be, " but we're close to a new high and with appropriate valuations," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

  " We're up against 1,700 on the S& P so it would take a lot to make it move substantially higher," he said.

  " The nearest things on the horizon are the Fed meeting and the jobs number so I think we're going to tread water here until that."

  Investors will eye the Wednesday statement from the Federal Reserve for any additional hints of when the central bank may begin to pare its $85 billion a month in bond purchases. Volume could be light in advance of the statement, which is expected at the end of a two-day policy meeting of the Federal Open Market Committee.

  The Dow Jones industrial average gained 12.06 points, or 0.08 percent, to 15,534.03. The Standard & Poor's 500 Index added 3.20 points, or 0.19 percent, to 1,688.53. The Nasdaq Composite Index rose 25.24 points, or 0.70 percent, to 3,624.38.

  The shakeup in the potash sector gave investors a reason to dump some of those stocks, with the selloff limiting the S& P 500's advance.

  Shares of Intrepid Potash plunged 30.7 percent to $13.49 while U.S-traded shares of Potash Corp fell 20.4 percent to $30.17 and Agrium lost 4.5 percent to $87.35.

  The S& P materials index was among the worst performers of the 10 industry groups, down 0.7 percent.

  With results in from 60 percent of S& P 500 companies, 67.4 percent have exceeded earnings expectations - in line with the average beat over the last four quarters. About 55 percent of companies have topped revenue expectations, more than the 48 percent of revenue beats in the past four earnings seasons but below the historical average, Thomson Reuters data showed.

  Coach Inc shares dropped 8.2 percent to $53.09 after the leather goods maker reported soft sales at its North American stores and announced the departures of two more executives. The stock was among the S& P 500's biggest percentage decliners.

  In contrast, U.S. health insurer Aetna Inc reported better-than-expected earnings in the second quarter as medical costs in its employer-based and commercial business remained low and it closed on its acquisition of Coventry Health Care. Aetna's stock rose 0.2 percent to $63.52.

  Mobile service provider Sprint Corp posted a wider quarterly loss on costs from shutting down its Nextel network, but revenue grew as customers spent more on wireless services. Sprint's stock jumped 3 percent to $5.91.

* Mosaic, Potash Corp tumble after Russia quits top potash cartel

  * Sprint posts wider quarterly loss even as revenue rises

  * Aetna profit, Pfizer earnings beat expectations

  * Futures up: Dow 31 pts, S& P 4 pts, Nasdaq 13 pts

  By Rodrigo Campos

  NEW YORK, July 30 (Reuters) - U.S. stocks were set to rise slightly at the open on Tuesday, bouncing back from a decline on Monday, as investors braced for consumer data in a week packed with economic numbers and a Federal Reserve policy statement.

  Volume could be subdued before the Fed statement on Wednesday at the end of a two-day meeting of policymakers. The Fed's Open Market Committee's statement will be combed for hints of when the central bank may begin to scale back its $85 billion a month in asset purchases aimed at stimulating the economy.

  The week is also heavy with earnings reports. Tuesday's highlights include health insurer Aetna and pharmaceutical company Pfizer, which reported profits that exceeded expectations.

  " Earnings are being consistent with what the market has been expecting and we are on Fed watch, so we'll probably have a range-bound market, possibly regaining yesterday's losses," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

  He said besides the Fed statement, investors are bracing for Friday's payrolls report as it may decide the Fed's next move.

  Non-farm payrolls are expected to have risen 184,000 in July, according to a Reuters survey.

  With results in from more than half of the S& P 500 companies, 67.2 percent have beaten earnings expectations - in line with the 67 percent average beat over the last four quarters. About 56 percent of the companies have beaten revenue expectations, more than the 48 percent of revenue beats in the past four earnings seasons, Thomson Reuters data showed.

  S& P 500 futures rose 4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 31 points, and Nasdaq 100 futures added 13 points.

  Shares of Mosaic Co tumbled 26 percent in premarket trading after Russia's Uralkali dismantled one of the world's largest potash partnerships by pulling out of a venture with its partner in Belarus, a move it expects will cause global prices to plunge by 25 percent.

  Intrepid Potash shares plunged 24 percent while U.S-traded shares of Potash Corp fell 23 percent and Agrium lost 7.6 percent.

  Mobile service provider Sprint Corp posted a wider quarterly loss on costs from shutting down its Nextel network, but revenue grew as customers spent more on wireless services. Shares rose 2.3 percent in premarket trading.

  Herbalife shares rose 8.1 percent premarket a day after the nutritional products company said its better than-expected earnings and rosy 2013 outlook were driven by a fast-growing global distributor network and strong demand for its weight-loss shakes and supplements.

SHANGHAI, July 30 (Reuters) - China's money rates fell
slightly on Tuesday after the People's Bank of China proactively
injected funds into money markets for the first time since
February, easing fears of another credit crunch like the one
which panicked markets last month.
China's central bank injected 17 billion yuan ($2.77
billion) into the money markets through seven-day reverse bond
repurchase agreements on Tuesday, the first time it has engaged
in open market operations since June 20, and the first time it
has issued reverse repos - which inject funds - since early
February.
But the new cash was priced high, with the bank setting the
official seven-day reverse repo rate at 4.4 percent, much higher
than the last official guidance rate of 3.35 percent,
" The central bank may be using the reverse repo rate to
clarify its attitude toward the market," said a dealer at a
state-owned bank in Beijing.
Dealers say the bank is using the interbank market as a way
to signal financial institutions to cut back on risky shadow
banking practices that has seen investment flowing into
speculative activity instead of the real economy in 2013.
Despite the high guidance rate, the money markets still had
room to relax, and did so, as fears of another cash crunch
receded.
Some rates reached as high as 30 percent in intra-day trade
in late June.
The benchmark weighted-average seven-day bond repurchase
rate fell slightly to 4.9848 percent by midday,
down 13 basis points from the previous close of 5.1165 percent.
The overnight rate dipped to 3.6574 percent
from 3.7776 percent, while the 14-day tenor was
down to 5.3562 percent from 5.5183 percent.

Current Prev close Change
(pct) (bps)
7-day repo 4.9848 5.1165 -13.17
7-day SHIBOR 4.9720 5.0570 - 8.50
Note: Repo rate is weighted average.


> > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > >

MARKET DRIVERS
- CHINA MONEY-Tighter interbank regulation seen after cash
squeeze
- Collapse in China bond volumes exposes market's seamy side

- China reform push means June turmoil may be just the
beginning

DATA POINTS
- External liquidity tracker: Collapse in FX purchases
hurts liquidity in May http://link.reuters.com/pem75t
- Impact of maturing central bank bills and repos GRAPHIC: http://link.reuters.com/pem75t
- Chinese government bond curve flattens on liquidity
squeeze, growth concerns GRAPHIC: http://link.reuters.com/jyr95t
- China's interest-rate swap curve is inverted on severe
liquidity squeeze GRAPHIC: http://link.reuters.com/ryr95t
- China corporate bond spreads have narrowed slightly
GRAPHIC: http://link.reuters.com/bas95t
- Hot money tracker: Hot money inflows have returned in
2013, boosting liquidity GRAPHIC: http://link.reuters.com/saz74t


> > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > >

(Editing by Kim Coghill)

* Investors wait for Fed statement, key econ data this wk

  * Crude supply from North Sea lower on maintenance

  * Coming up: API weekly inventory data at 2030 GMT (Adds detail, updates prices)

  By Jessica Jaganathan

  SINGAPORE, July 30 (Reuters) - Brent crude futures remained steady above $107 a barrel as investors looked to a Federal Reserve meeting for clues on the outlook for the U.S. monetary stimulus programme that has bolstered demand in the world's No.1 oil consumer.

  Investors also avoided taking big positions ahead of key economic data this week including U.S. payroll numbers and manufacturing from China, the world's second largest oil consumer.

  Brent crude futures had slipped 5 cents to $107.40 a barrel by 0453 GMT, after falling 0.8 percent last week.

  U.S. crude futures fell 14 cents to $104.41, pressured by a recovery in the U.S. dollar. The North Sea benchmark's premium over its U.S. counterpart widened to $3.02.

  " Oil prices are pretty stable but there's quite a lot potentially happening this week and I think traders are prepared to wait for the data to start to come," said Ric Spooner, chief market analyst at CMC Markets.

  " The market is kind of level but the risk will be to the downside."

  The U.S. central bank is expected to issue a statement after its two-day meeting ends on Wednesday. The Bank of England and the European Central Bank hold policy meetings this week as well.

  The U.S. payrolls report on Friday is also in focus, as an improving labour market would impact the timing of any tapering in Fed stimulus.

  " The quiet session in most commodity markets suggested participants mostly kept to the sidelines ahead of a string of U.S. data and policy meetings this week," ANZ analysts wrote in a note on Tuesday.

  Elsewhere, investors fretted that manufacturing surveys later this week might highlight weakness in China.

  Activity in China's vast manufacturing sector may have contracted in July for the first time in 10 months, a Reuters poll showed, signalling a protracted slowdown in the world's second-largest economy as demand at home and abroad sags.

  U.S. inventory data will also offer clues on the country's oil demand. U.S. commercial crude oil stockpiles likely fell last week for the fifth straight week, a Reuters poll of six analysts showed on Monday.

  SUPPLY CURTAILED

  Losses in oil prices were limited as exports from several suppliers have been curbed in recent weeks.

  The North Sea's Forties pipeline has cut pumping rates by about 40,000 barrels per day due to maintenance, trade sources said, tightening supply of the crude that underpins the Brent benchmark.

  Assailants attacked an Islamist party office in Tripoli on Monday and a soldier was killed in fighting in Libya's eastern city of Benghazi, officials said, in an escalation of violence following the assassination of a political activist last week.

  That prompted U.S. oil company Marathon Oil Corp to study the sale of its stake in a key Libyan oil consortium, Waha.

  The Libyan oil minister said that operations at the crude oil export terminals of Es Sider and Ras Lanuf continued as normal, despite protests and strikes.

  Also supporting oil prices were expectations that Iraq, OPEC's second-biggest producer, will report an output decline for 2013, its first after two years of robust gains. (Editing by Joseph Radford)

* China central bank injects cash for first time since late
Feb
* MSCI Asia ex-Japan narrowly higher after erasing early
losses
* Japan's Nikkei gains as yen strength wanes
* Bright spots seen in mixed Japan economic data
* Dollar index gains, moves away from five-week low
* Aussie dollar skids after RBA chief hints at rate cut

By Lisa Twaronite
TOKYO, July 30 (Reuters) - Asian stocks rose on Tuesday
after China's central bank injected funds into money markets for
the first time since February, while the dollar index edged up
from a five-week low as investors positioned for the Federal
Reserve's policy meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan
erased early losses and eked out a slight gain.
A weaker yen helped Tokyo's Nikkei share average push
into positive territory, and a spate of mixed Japanese economic
data also contained some bright spots.
China's central bank injected funds into money markets via
its open market operations, helping alleviate fears of another
cash crunch ahead of the month end after a severe cash squeeze
in late June that caused market panic and knocked shares lower.
The Shanghai Composite Index rose 1.1 percent, while
Hong Kong's Hang Seng Index rose 0.7 percent.
" The PBOC (People's Bank of China) cash injection was a
positive today, but I don't think it will be anything more than
a short-term lift for the Chinese banking sector," said Linus
Yip, a strategist at First Shanghai Securities.

FED, PAYROLLS
Other central banks take centre stage this week as investors
wait to see whether Fed officials lay the groundwork for paring
their $85 billion-a-month bond purchase programme as early as
September. The Bank of England and the European Central Bank
also hold policy meetings this week.
The U.S. payrolls report on Friday is also in focus, as an
improving labour market would help determine the timing of any
Fed stimulus reduction. The report is expected to show 185,000
jobs were added in July, and the jobless rate dipped to 7.5
percent.
An upbeat report would lend credence to speculation the Fed
will start tapering its stimulus in September, and would likely
give the dollar a further lift.
" We've been seeing very subdued activity from clients, as
it's quite obvious people are waiting to see what comes out of
the U.S. for further direction," said Bart Wakabayashi, head of
forex at State Street Global Markets in Tokyo.
" There's a bit of a consensus that the recent sell-off in
dollar/yen and equity markets seems like a prelude to some kind
of dovish remark from the FOMC, and we'll be right back where we
were three days ago," he said.
Data showed Japanese industrial output fell 3.3 percent in
June from May, the first drop in five months, but analysts still
see the economy on track for a gradual recovery.
Japan's jobless rate fell below 4.0 percent for the first
time in more than 4-1/2 years and the availability of jobs hit
the highest in five years, boding well for the government's
efforts to revive the economy and end deflation.

On Wall Street on Monday, all three major indexes moved
lower, while European shares finished the day mostly flat.

DOLLAR GAINS, AUSSIE SLIDES
Against the yen, the dollar gained 0.4 percent to 98.41 yen
, moving away from Monday's trough of 97.61 yen, which was
the lowest in nearly a month.
The euro edged down about 0.1 percent against the greenback
to $1.3251. That contributed to the dollar index's
rise of 0.2 percent to 81.821, moving away from a five-week low
of 81.499 hit on Monday.
The Australian dollar plunged more than half a U.S.
cent after the central bank governor said inflation would be no
bar to a cut in interest rates and that the local currency could
fall further. It hit a two-week low of $0.9085, taking losses
for the day to more than 1.2 percent.
Commodities were under pressure ahead of the Fed meeting and
on concerns about the economic outlook in China.
Analysts polled by Reuters forecast China's manufacturing
sector may have contracted in July for the first time in 10
months, signalling a protracted slowdown in the world's
second-largest economy.
Copper fell about 0.2 percent to $6,867.25 a tonne,
while U.S. crude lost 0.2 percent to $104.34 a barrel.
Spot gold was little changed as traders shied away
from taking big bets ahead of the Fed meeting, edging up 0.05
percent to $1,327.61 an ounce.

LONDON, July 30 (Reuters) - European shares were set to open higher on Tuesday, tracking stronger Asian markets, although mixed company results and some caution ahead of central bank meetings were expected to limit the market's advancement.

  At 0601 GMT, futures for the Euro STOXX 50, Britain's FTSE 100, Germany's DAX and France's CAC were 0.5 to 0.7 percent higher.

* Fed policy meet begins later Tuesday
* Shanghai premiums fall to about $20/oz
* Physical demand slowing down - analysts

(Adds comments, updates prices)
By A. Ananthalakshmi
SINGAPORE, July 30 (Reuters) - Gold was little changed on
Tuesday, hovering near a five-week high, as traders shied away
from taking big bets ahead of a key Federal Reserve meeting
beginning later in the day.
The Fed starts its two-day policy meeting on Tuesday and is
expected to release a statement on Wednesday afternoon. Markets
are watching closely for clues on when the U.S. central bank
will start dialling back its $85 billion monthly bond purchases.

" The (economic) numbers coming from the United States are
pretty mixed. Chances are there won't be any major
announcement," said Ng Cheng Thye, head of precious metals at
Standard Bank in Singapore.
The Fed has said that the bank would likely begin reducing
its stimulus later in 2013 and halt it altogether by mid-2014.
But it has left open the option of changing stimulus exit plans
if the economic outlook worsens.
Data on Monday showed that contracts to purchase previously
owned U.S. homes fell in June, retreating from a more than
six-year high, although the U.S. labour market has shown signs
of strength in recent weeks.
Spot gold edged up 0.05 percent to $1,327.71 an ounce
by 0324 GMT. It fell 0.5 percent on Monday as investors took
profits after three weeks of gains.
The metal has fallen 20 percent this year on fears of an end
to easy central bank money and sharp outflows from gold-backed
exchange traded funds, but prices have recovered from a
three-year low hit in June.
" Since the prices have come back $150 from their low, demand
has slowed down. In fact we are seeing some small de-hoarding
from the Far East it's not a lot but they are definitely taking
some profit at these price levels," said Standard Bank's Ng.
Prices on the Shanghai Gold Exchange have fallen to about
$20 an ounce over London spot prices from over $25 last week.
" Physical market activity seems to have lightened off over
the past week as the market has moved above $1,320," ANZ
analysts wrote in a note. " Shanghai premiums yesterday were
around $5 below the previous week, which suggests the market may
find it tough to hold flat price rallies."

Precious metals prices 0324 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1327.71 0.72 +0.05 -20.71
Spot Silver 19.81 0.00 +0.00 -34.58
Spot Platinum 1436.74 -2.76 -0.19 -6.40
Spot Palladium 737.72 -4.28 -0.58 6.61
COMEX GOLD AUG3 1327.70 -0.70 -0.05 -20.77 1927
COMEX SILVER SEP3 19.82 -0.04 -0.22 -34.60 2074
Euro/Dollar 1.3252
Dollar/Yen 98.28

COMEX gold and silver contracts show the most active months

(Reporting by A. Ananthalakshmi Editing by Joseph Radford and
Richard Pullin)

* Lawmakers running out of time to avoid government shutdown

  * Short-term fix would fund government for a few more weeks

  * Government funding, debt limit deadlines could converge

  By David Lawder and Caren Bohan

  WASHINGTON, July 29 (Reuters) - With time running out for the U.S. Congress to agree on next year's budget, some Republicans are pushing for a short-term fix that would delay the confrontation over a government shutdown until November.

  If lawmakers agree on a short-term plan to fund the government for a few weeks past the current Oct. 1 deadline, it would mean that the fight over government funding for next year would coincide with a potentially more consequential clash over raising the federal borrowing limit.

  House Republican aides said a growing number of party lawmakers want to try to buy more time to agree on funding levels for government agencies and programs, though no decisions have been made.

  One aide said a short-term spending measure would be a " no-drama" way to allow the House and Senate extra time to work on annual spending bills.

  Another Republican aide said there would be advantages to tackling differences over government funding at the same time Congress is debating conditions for increasing the debt limit.

  House Republican leaders have not made any decisions yet on whether to seek a short-term spending measure known as a " continuing resolution" because the chamber is still focused on passing its 12 appropriations bills, said Michael Steel, a spokesman for House Speaker John Boehner.

  President Barack Obama and congressional Republicans are bracing for a major budget battle this fall as they try to resolve deep divisions over taxes, automatic spending cuts known as the sequester, and whether to rein in costly federal benefits programs.

  BACK-TO-BACK DEADLINES

  As Congress prepares for a five-week recess that starts on Friday, it is grappling with two deadlines - the need for government funding legislation as it starts the new fiscal year on Oct. 1 and the need to raise the $16.7 trillion debt limit to avoid default, likely sometime in November.

  Once lawmakers return from their break on Sept. 9, they have only nine legislative days to work out differences before the Oct. 1 deadline to avert a government shutdown.

  " There's not much time," said Tad DeHaven, a budget analyst at the libertarian Cato Institute in Washington. " So it looks to me like a continuing resolution. The only question is what number."

  Obama's Democrats and congressional Republicans are deeply divided over spending levels for the new fiscal year. Republicans want to keep savings from the automatic cuts in place and have written their spending bills to a $967 billion cap, the lowest in a decade.

  Democrats, meanwhile, view that spending limit as far too austere and are proposing a higher cap of $1.058 trillion. The caps apply to programs ranging from education to national parks to the military.

  Some aides say one way to find common ground on a short-term funding fix would be to keep funding at this year's annualized level - about $988 billion - for a few additional weeks.

  Given the polarization between the two parties, even hammering out a short-term agreement could be challenging, though Congress has often resorted to temporary funding extensions at the start of a new fiscal year.

  Democrats are likely to insist that any funding extension replaces the sequester cuts, which are now causing temporary layoffs at government agencies and military contractors alike.

  " We want sequestration to be turned off, not extended," said Matthew Dennis, spokesman for Representative Nita Lowey, the top Democrat on the House Appropriations Committee.

  Many Republicans want to keep the sequester in place and view the debt limit as a key leverage point to demand even deeper spending cuts, particularly reforms to the Social Security and Medicare programs for the elderly.

  However, pushing the government too close to a debt default would likely cause turmoil in financial markets. This happened during the bruising budget fight of 2011, when congressional dysfunction over the issue prompted Standard and Poor's to strip the United States of its top-tier credit rating.

SHANGHAI, July 30 (Reuters) - China has ruled out the possibility of a proposed summit meeting with Japan, the official China Daily reported on Tuesday, after Tokyo proposed the meeting in a bid to defuse a territorial row.

  The report, quoting a statement by an unidentified Chinese official made on Monday, comes during a visit by Japanese Vice Foreign Minister Akitaka Saiki.

  Saiki's visit is the latest in a series of efforts by Japanese Prime Minister Shinzo Abe to improve relations soured by the bitter row over uninhabited islands claimed by both countries. (Reporting by Pete Sweeney Editing by Paul Tait and Michael Perry)

* Fed could signal plans about stimulus, jobs data this week as well

  * Drug firm Perrigo to buy Elan Publicis, Omnicom in merger

  * U.S. pending home sales pull back in June as mortgage rates rise

  * Dow off 0.2 pct, S& P down 0.4 pct, Nasdaq off 0.4 pct

  By Caroline Valetkevitch

  NEW YORK, July 29 (Reuters) - U.S. stocks fell on Monday, pulling back before this week's Federal Reserve meeting that could signal when the Fed is going to begin reducing its bond purchases aimed at helping the economic recovery.

  Losses were led by the energy and financial sectors, with both the S& P energy index and S& P financial index down 0.8 percent. Shares of Southwestern Energy slid 3 percent to $38.14 and shares of Noble Energy fell 2.1 percent to $62.07 following as a decline in natural gas prices.

  Several merger announcements helped to limit losses, along with news of a $1 billion stock repurchase program by Caterpillar that pushed its stock up 1.1 percent to $83.03, making it the biggest support for the Dow.

  But the Fed's statement, which is due on Wednesday after a two-day meeting of the Fed's Open Market Committee, kept investors wary of buying. The statement will be scrutinized for hints on when the central bank may begin to scale back its massive bond-buying aimed at stimulating the economy.

  Data this week includes July's payrolls report, another key event for the market.

  " A lot depends on how (Fed policymakers) interpret the data and how they comment ahead of the employment report. We're looking for clues as to whether tapering is going to begin in September or not," said Bucky Hellwig, senior vice president at BB& T Wealth Management in Birmingham, Alabama.

  The Dow Jones industrial average was down 36.86 points, or 0.24 percent, at 15,521.97. The Standard & Poor's 500 Index was down 6.32 points, or 0.37 percent, at 1,685.33. The Nasdaq Composite Index was down 14.02 points, or 0.39 percent, at 3,599.14.

  September is the most likely time for the Fed to begin paring its $85 billion in monthly bond purchases, according to a July 22 Reuters poll of economists.

  Some investors have worried that big gains in jobs numbers could be enough of an economic pickup to prompt an early end to the Fed's bond buying, a program which has helped stocks rally for much of this year.

  But analysts have noted that signs of a stronger economy are more important for the market in the long run. The S& P 500 is up 18.2 percent for the year so far.

  Monday's data was less than upbeat. Contracts to purchase previously owned U.S. homes fell in June, retreating from a more than six-year high touched in May as rising mortgage rates were starting to dampen home sales.

  Merger activity could give equities support as big deals show that large investors see value in the market.

  " It's interesting to me that you've got deal activity this time of the year because normally this is the time of the year when the markets are quite quiet," said Dan Veru, chief investment officer of Palisade Capital Management in Fort Lee, New Jersey, which manages about $4.5 billion in assets.

  " To have mergers going on now probably bodes well that the fall is going to be a very active period."

  U.S. drugmaker Perrigo agreed to buy Irish drug company Elan for $8.6 billion. U.S.-traded Elan shares rose 3.5 percent to $15.46. Perrigo was the S& P 500's worst percentage decliner, shedding 6.7 percent to $125.17.

  Hudson's Bay Co, operator of department store chains Lord & Taylor in the United States and The Bay in Canada, said it would buy luxury retailer Saks Inc for $16 per share. Saks shares rose 4.2 percent to $15.95.

  Shares in advertising groups jumped after Publicis and Omnicom said they would merge. Investors bet the deal would create an opening for rivals to poach defecting clients and potentially trigger more deals.

  Omnicom shares were down 0.6 percent to $64.75 while smaller rival Interpublic Group gained 4.7 percent to $16.61.

  Among the day's big gainers, shares of CF Industries Holdings Inc, the world's second-largest maker of nitrogen fertilizer, jumped 11.8 percent to $202.30 after activist hedge fund Third Point LLC said it had acquired a stake.

  In earnings news, Loews Corp, the hotel, energy and financial services conglomerate, posted a jump in second-quarter profit as revenue from its insurance arm, CNA Financial, increased nearly 13 percent. Shares of Loews ended up 0.02 percent at $46.06.

  After the closing bell, shares of PMC-Sierra were down 8.7 percent at $6.40 following the release of its results.

  With results in from more than half of the S& P 500 companies, 67.2 percent are beating analysts' earnings expectations - in line with the 67 percent average beat over the last four quarters. About 56 percent of the companies are beating revenue expectations, more than the 48 percent of revenue beats in the past four earnings seasons, Thomson Reuters data showed.

  Volume was roughly 5.2 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, well below the average daily closing volume of about 6.4 billion this year.

  Decliners outpaced advancers on the NYSE by about 2.3 to 1 and on the Nasdaq by a ratio of more than 2 to 1.

* MSCI Asia ex-Japan slightly lower in early trading

  * Japan's Nikkei opens down but erases early losses

  * Bright spots seen in Japan economic data

  * Dollar index gains, moves away from five-week low

  By Lisa Twaronite

  TOKYO, July 30 (Reuters) - Stocks wobbled and the dollar index edged up from a five-week low on Tuesday as investors positioned for the Federal Reserve's monetary policy meeting at which it might offer clues to the timing of its stimulus reduction.

  MSCI's broadest index of Asia-Pacific shares outside Japan and Tokyo's Nikkei share average both opened slightly lower, although a weaker yen helped Japanese shares push into positive territory, and a spate of Japanese economic data contained some bright spots.

  Central banks take centre stage this week as investors wait to see whether Fed officials would lay the groundwork for paring the Fed's $85 billion-a-month bond purchase programme as early as September. The Bank of England and the European Central Bank also hold policy meetings this week.

  The U.S. payrolls report on Friday is also in focus, as an improving labour market would help determine the timing of Fed stimulus reduction. The report is expected to show 185,000 jobs were added in July, and a dip in the jobless rate to 7.5 percent. An upbeat report would lend credence to speculation the Fed will start tapering its stimulus in September, and would likely give the dollar a lift.

  " We've been seeing very subdued activity from clients, as it's quite obvious people are waiting to see what comes out of the U.S. for further direction," said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo.

  " There's a bit of a consensus that the recent sell-off in dollar/yen and equity markets seems like a prelude to some kind of dovish remark from the FOMC, and we'll be right back where we were three days ago," he said.

  " It seems like we're setting ourselves up for one of those, 'buy the rumour, sell the fact,' type things, which markets and humans tend to do," Wakabayashi added.

  Data released early on Tuesday showed Japanese industrial output fell 3.3 percent in June from the previous month, down for the first time in five months, but analysts see factory activity on track for a recovery backed by exports and private consumption.

  Japan's jobless rate hit its lowest level in four and a half years in June and the availability of jobs hit the highest in five years, boding well for the government's efforts to revive the economy and end deflation.

  On Wall Street on Monday, all three major indexes moved lower. European shares finished the day mostly flat, as weaker bank shares offset the boost to sentiment from two large mergers in the media and pharmaceuticals sectors.

  Even with Monday's losses, the Standard & Poor's 500 Index is set to post its best monthly performance since October 2011, while Nasdaq Composite Index is having its best month in a year and a half.

  Against the yen, the dollar gained 0.2 percent to 98.16 yen , moving away from its nearly one-month low of 97.61 yen touched on Monday.

  The euro was little changed against the greenback at $1.3259 , while the dollar index added 0.1 percent to 81.741, moving away from a five-week low of 81.499 hit on Monday and retraced early on Tuesday.

  Commodities were under pressure ahead of the Fed meeting, and also faced concerns that manufacturing surveys later this week might highlight weakness in China.

  Copper fell about 0.1 percent to $6,869 a tonne, while U.S. crude lost 0.3 percent to $104.27 a barrel.

  Spot gold edged up 0.05 percent to $1,327.61 an ounce.

HONG KONG, July 30 (Reuters) - Hong Kong shares will likely trade in a recent range on Tuesday as investors mark time until the outcome of the U.S. Federal Reserve policy meeting and key U.S. jobs data later in the week.

  Huaneng Power and Shandong Xinhua Pharmaceutical are among companies due to report their interim earnings later in the day. A weak mainland Chinese market may weigh on Hong Kong, with cash rates closely watched as the month draws to a close.

  On Monday, the Hang Seng Index slipped 0.5 percent to 21,850.15 points, staying in the same 300-point range for about a week. The China Enterprises Index of the top Chinese listings in Hong Kong fell 1.2 percent.

  Elsewhere in Asia at 0035 GMT, Japan's Nikkei and South Korea's KOSPI were each up 0.3 percent.

  FACTORS TO WATCH:

  * Foreign carmakers are reaping exorbitant profits selling imported luxury cars in China and should face an anti-trust investigation, the official Xinhua News Agency said, in what may amount to a shot across the bow of foreign auto firms.

  * Beijing Enterprises Holdings Ltd said on Tuesday it would buy from its parent company 22.01 percent of city gas pipelines operator China Gas Holdings Limited for HK$8.22 billion ($1.06 billion) to strengthen its position in the Chinese natural gas sector.

  * Hong Kong's securities regulator appointed a liquidator and applied to a court to wind up China Metal Recycling (Holdings) Ltd, the first time the watchdog has used its powers to try to force a listed company into liquidation.

  * China National Petroleum Corp (CNPC), parent of PetroChina , said on Monday it had raised its overseas oil and gas equity output by 6.5 percent in the first half of 2013 versus a year ago, with output in Kazakhstan and Iraq exceeding targets.

  * Wynn Macau Ltd said it reached an agreement with Leighton Contractors (Asia) Limited for the construction works for its Cotai project, involving construction of an integrated luxury resort containing a casino, hotel and other facilities, for a guaranteed maximum price of HK$20 billion.

  * Wynn Macau Ltd said its net prot attributable to owners of the company amounted to $227.3 million for the three months ended in June, up from $220.6 million the same period in 2012.

  * Yanzhou Coal Mining Company Limited said it expects its net profit attributable to the equity holders of the company to record a loss of 2.35 billion yuan for the half of 2013 due to losses in exchange rates and a decline of in the sale price of coal.

  * Shangri-la Asia Ltd said it expects to see a material decline in profit for the six months of 2013 due to a decline in operating profit of its hotels in China and an increase in pre-opening expenses for hotels.

  * 361 Degrees International Limited said its same store sales for the second quarter fell 0.8 percent while the retail channel inventory at June 30 represented about 4.4 months of sales.(Reporting by Clement Tan and Donny Kwok Editing by Eric Meijer)

(Repeats to additional subscribers)

  By A. Ananthalakshmi

  SINGAPORE, July 29 (Reuters) - Precious metals storage firm Malca-Amit will open a new facility in Singapore this week that can hold up to 200 tonnes of silver, and plans to add more capacity to meet growing demand for the metal in Asia.

  Silver prices have fallen 35 percent this year and are trading near three-year lows, caught up in a 20-percent slide in the price of gold on fears of an end to easy central bank money.

  Silver has long been a favorite of retail investors and speculators who want to gain cheap exposure to precious metals. Gold is currently 67 times more expensive than silver.

  The Singapore vault will be Malca-Amit's biggest silver facility, and is about 30 percent booked.

  " Our core business is gold. But in order to accommodate the growing demand for silver, we decided to open this dedicated depository," Joshua Rotbart, general manager at Malca-Amit's precious metals business, told Reuters.

  Hong Kong-based Malca-Amit provides logistics and storage facilities for precious metals, diamonds, fine arts and other luxury items.

  The company is also looking to open a silver-storage facility in Hong Kong to meet demand from individual clients and bullion dealers, Rotbart said.

  " We are still exploring our options for a silver depository in Hong Kong and we may utilize our existing facility. At this point we are focusing on leveraging our facilities in Bangkok, Hong Kong and China," he said.

  Malca-Amit is boosting its Asian storage facilities and has nearly completed a vault in Shanghai for precious metals, diamonds and other luxury items. Its gold vaults in Hong Kong and Singapore can hold 1,000 tonnes each.

  " Gold demand is on the rise. Both from financial institutions and high net worth individuals who are looking for long-term storage solutions," said Rotbart, citing Singapore and Hong Kong as the main destinations in Asia.

  Deutsche Bank last month launched its second-biggest gold-storage vault in Singapore with a capacity of 200 tonnes. (Reporting by A. Ananthalakshmi Editing by Richard Pullin)