Sawt Falasteen - Stock markets diverge before key earnings, rate calls

The Federal Reserve is expected to sit tight over US interest rates Wednesday, but its post-meeting statement will be pored over for confirmation that it will likely lower borrowing costs in September as inflation falls.

Before then, focus will be on Microsoft as the world's second-largest listed company publishes its latest earnings, noted Joshua Mahony, chief market analyst at traders Scope Markets.

"The story appears to be similar for many of these big tech names, with traders on the lookout for signs that the vast sums of money being invested in AI has started to pay dividends," Mahony said.

Wednesday also sees the Bank of Japan makes its own much-anticipated decision over interest rates.

The Tokyo stock market closed slightly up Tuesday, while the yen dropped versus the dollar.

London's FTSE 100 index was down approaching the half-way mark following some mixed British earnings and as traders gear up for the Bank of England's policy announcement Thursday, with analysts split on whether it will cut rates.

Paris advanced following data showing the French economy expanded more than expected in the second quarter.

Frankfurt also rose despite data showing Germany's economy contracted in April-June.

Markets had a rough ride last week after disappointing earnings from heavyweights Tesla and Google-parent Alphabet, which raised questions about the surge in tech giants that has helped power some indices to record highs this year.

And investors are steeling themselves for more reports this week from other titans, including Facebook-parent Meta, Apple and Amazon.

Oil prices extended Monday's retreat on continued worries about demand owing to weakness in the Chinese economy.

That overshadowed tensions in the Middle East after Israeli Prime Minister Benjamin Netanyahu vowed a "severe response" to a strike on the annexed Golan Heights that killed 12 children.

The warning came as diplomats raced to contain escalation between Israel and Iran-backed Hezbollah in Lebanon, which has been blamed for the attack.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.2 percent at 8,277.34 points

Paris - CAC 40: UP 0.4 percent at 7,471.91

Frankfurt - DAX: UP 0.4 percent at 18,392.69

Euro STOXX 50: UP 0.6 percent at 4,841.87

Tokyo - Nikkei 225: UP 0.2 percent at 38,525.95 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 17,002.91 (close)

Shanghai - Composite: DOWN 0.4 percent at 2,879.30 (close)

New York - Dow: DOWN 0.1 percent at 40,539.93 (close)

Euro/dollar: UP at $1.0832 from $1.0826 on Monday

Pound/dollar: DOWN at $1.2853 from $1.2862

Dollar/yen: UP at 154.80 yen from 154.00 yen

Euro/pound: UP at 84.28 pence from 84.14 pence

West Texas Intermediate: DOWN 0.1 percent at $75.74 per barrel

Brent North Sea Crude: DOWN 0.1 percent at $79.67 per barrel

O.Salim--SF-PST