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US stocks mixed as Fed meeting begins; oil declines

➤ Stocks mixed amid Middle East tensions, ahead of Fed decision.

➤ US industrial output rebounds more than expected in August.

➤ Sterling dips as Brexit talks fail.

➤ Brent crude oil declines 1.6%.

Wall Street was mixed Sept. 17 and so was European stocks, as markets shifted focus to the U.S. Federal Reserve's decision due tomorrow.

The S&P 500 index opened marginally lower and Nasdaq 100 was up 0.1% around 9:30 a.m. ET. The FTSE 100 was little changed, while Germany's DAX index dipped 0.4%. France's CAC 40 added 0.1%.

The Fed, which began its two-day monetary policy meeting today, is widely expected to announce a rate cut tomorrow. U.S. President Donald Trump has repeatedly asked the Fed to lower interest rates, recently pushing for a zero percent rate or lower.

Citi analysts expect the Fed to deliver a rate cut, but at the same time indicate no further cuts for this year, with Chair Jerome Powell presenting an upbeat view of the U.S. economy.

London Capital Group's Ipek Ozkardeskaya echoed similar sentiment, saying the Fed could be less dovish this time around to prevent the market from pricing in another rate cut, again.

Meanwhile, U.S. industrial production rebounded more than expected in August following a decline registered in the prior month as manufacturing and mining output recovered month over month.

In Asia, the Shanghai SE Composite shed 1.7% as the People's Bank of China left its one-year medium-term lending facility rate unchanged amid speculation that more stimulus may be on the way for the slowing economy.

Hong Kong's Hang Seng index dropped 1.2% as Moody's downgraded the semi-autonomous territory's rating outlook to negative over ongoing protests against a now-withdrawn extradition bill.

Meanwhile, Japan's Nikkei 225 index rose 0.1% as the country closed in on a trade agreement with the U.S.

Among commodities, Brent crude oil declined 1.6% to $67.93 per barrel on the ICE Futures Exchange, after Yemen's Houthi rebel group's attacks on two Saudi Arabian Oil Co. plants which nearly halved the kingdom's oil output.

Iran has reportedly ruled out the possibility of holding negotiations with the U.S. as the Trump administration hinted at Iran's potential role in the attacks. Trump said he does not want a war with Iran, which denied that it was behind the attacks. The Saudi energy minister was due to hold a press conference today.

Gold was little changed around 9:30 a.m. ET.

In currencies, sterling dipped 0.1% against the dollar as U.K. Prime Minister Boris Johnson and European Commission President Jean-Claude Juncker agreed to ramp up Brexit negotiations after failing to make a breakthrough Sept. 16. The EU said it was still awaiting detailed proposals from Britain regarding the Irish backstop.

Meanwhile, the U.K. Supreme Court was due to hear appeals on Scottish and British court rulings over Johnson's decision to prorogue the Parliament. The pound is expected to rally if Parliament is allowed to return, Ozkardeskaya wrote.

The euro was up 0.2%, as the European Parliament approved Christine Lagarde's candidacy as president of the European Central Bank, which is currently headed by Mario Draghi. The Japanese yen was down 0.1%.

In the bond market, Treasurys were little changed as 10-year yields fell less than a basis point to 1.843% as of 9:41 a.m. ET. Ten-year yields on the German Bunds were also little changed, with bonds marginally falling.

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The day ahead:

10 a.m. ET — U.S. housing market index (Econoday consensus: 66)

4 p.m. ET — U.S. Treasury international capital