Asian shares slip as traders ready for Fed rate hike

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A currency trader walks by the screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room in Seoul, South Korea, Tuesday, Dec. 18, 2018. Asian stocks fell on Tuesday, tracking losses on Wall Street as traders braced for an interest rate hike by Federal Reserve. (AP Photo/Lee Jin-man)

Asian stocks fell on Tuesday, tracking losses on Wall Street as traders braced for an interest rate hike by Federal Reserve.

KEEPING SCORE: Japan's Nikkei 225 index was 1.2 percent lower at 21,242.66 and the Kospi in South Korea dropped less than 0.1 percent to 2,070.54. Hong Kong's Hang Seng eased 0.3 percent to 26,022.16. The Shanghai Composite index dropped 0.6 percent to 2,583.51. Australia's S&P ASX 200 was down 0.9 percent at 5,609.00. Shares were lower in Taiwan and Southeast Asia.

WALL STREET: On Monday, broad selling knocked U.S. indexes to their lowest levels in over a year. Investors sold almost everything, from technology and retail stocks to steadier high-dividend companies. Less than 40 of the 500 stocks comprising the S&P 500 finished the day higher. The benchmark index gave up 2.1 percent to 2,545.94, its lowest level since Oct. 9, 2017. The Dow Jones Industrial Average skidded 2.1 percent to 23,592.98 and the Nasdaq composite was down 2.3 percent at 6,753.73. The Russell 2000 index of smaller company stocks lost 2.3 percent to 1,378.14.

FED MEETING: The Federal Open Market Committee begins a two-day meeting on Tuesday. It is expected to raise its short-term interest rate by a modest quarter-point, to a range of 2.25 percent to 2.5 percent a day later. The rate is used as a benchmark for many consumer and business loans. Investors fear more monetary tightening would weigh on U.S. growth, and eventually, the global economy, that is already expected to slow in 2019 because of trade tensions. President Donald Trump tweeted that it was "incredible" the Fed was considering another rate hike, with "a very strong dollar and virtually no inflation." The central bank forecasts three more rate hikes in 2019.

ANALYST'S TAKE: "Despite Donald Trump's recent overture, the Fed looks set to hike rates again on Wednesday with market players anxious to see if the economy can handle more policy tightening given expectations for slowing growth," ING economists Nicholas Mapa and Prakash Sakpal said in a commentary.

ENERGY: Oil prices fell on worries about oversupply and softening growth in China, which could hit demand. Benchmark U.S. crude shed 49 cents to $49.39 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.32 to $49.88 in New York on Monday. Brent crude, used to price international oils, gave up 59 cents to $59.02 a barrel. It lost 67 cents to settle at $59.61 a barrel in London.

CURRENCIES: The dollar weakened to 112.61 yen from 112.83 yen in late trading Monday. The euro rose to $1.1353 from $1.1349.

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AP Markets Writer Marley Jay contributed to this report. He can be reached at http://twitter.com/MarleyJayAP