By Marc Jones
LONDON (Reuters) - World stocks fell and the dollar weakened on Tuesday, as investors locked in gains from the past month before a Federal Reserve policy meeting and results from Apple.
Wall Street was set for third subdued start in a row as interest in what Apple would say about global demand almost matched speculation about Fed signals on U.S. interest rates after a two-day meeting that starts later on Tuesday.
European shares fell 0.5 percent following a profit warning from BASF. The world's largest chemicals firm blamed struggling emerging markets like China and Brazil
Tokyo's Nikkei tumbling overnight too, after the yen gained. Chinese markets dove 2 percent, then recovered, in another volatile session after last week's surprise PBOC rate cut.
The euro was little changed at $1.1050 after the European Central Bank's chief economist said there were "no taboos" as it seeks ways to push up inflation.
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"We are in a situation where the time-frame for achieving the inflation objective risks once again to be moved back," the ECB's Peter Praet said. "The Governing Council has given a very strong message: it is ready to draw the consequences of its assessment of the monetary policy stance."
The most pressing topic for traders remained the Fed meeting that ends on Wednesday. Markets are pricing in only around a 7 percent chance the U.S. central bank will raise rates this week, but they will be watching for signals that it might act at its next meeting, in December.
After rising 3 percent over the last two weeks despite diminishing expectations that rates would rise in 2015, the dollar tracked world shares lower to fall for a second day against the other main global currencies.
Against a basket of currencies, the dollar was off 0.1 percent at 96.719 and yields on U.S. government bond Treasuries drifted lower.
HSBC currency strategist Dominic Bunning said markets were in a holding pattern before the Fed and Friday's Bank of Japan meeting, which may bring more stimulus, and that the current risk-off mood would unlikely to last.
"Classic risk assets are all slightly softer, but it's not been an aggressive move," he said. "I don't think the positioning is there to see these massive spikes in emerging market selling and related safe-haven strength."
The euro fell 0.6 percent to 133.03 yen, its weakest since early September. The dollar also fell 0.6 percent to 120.34 yen, down from 121.60 on Friday.
APPLE EYED
Apple will announce results later, with investors anxious to hear how many new phones it has been selling and its assessment of the world economy. Twitter reports after markets close as well.
Alibaba shares rose nearly 10 percent to $83.50 in pre-open trading after the China-focused e-commerce giant reported better-than-expected revenue.
But BASF, whose products range from car coatings to mining acids, blamed the pressures facing major emerging markets like China and Brazil for the profit warning that knocked its shares 3 percent lower.
"We experienced a pronounced summer lull and no volume momentum in September. Major markets like Brazil are in a recession, or face lower growth rates, such as China," Chief Executive Kurt Bock said.
MSCI's main emerging markets stock index was on course for its fifth decline in six days.
In Russia, Finance Minister Anton Siluanov compounded big falls in the rouble when he said he saw risks the country's Reserve Fund would be exhausted by the end of next year if oil prices stay at their current level.
Oil prices extended losses into a third week. U.S. crude was down 1 percent at $43.45 a barrel and Brent fell as low $47.17 a barrel before a minor rebound in early European trading.
Three-month copper was up a touch at $5,226 a tonne, while safe-haven gold climbed to $1,165 an ounce to end three days of falls.
"Unless the Fed says it is going to reverse course, that it's not going to tighten but to loosen because the U.S. economy is so weak - which nobody expects - gold shouldn't move above $1,200 on a sustainable basis," Julius Baer analyst Carsten Menke said.
(Additional reporting by Jemima Kelly and Jan Harvey in London; Editing by Larry King)