LIVE MARKETS-Pre-Fed calm setting in

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PRE-FED CALM SETTING IN (0759 GMT)

Exactly one year ago when the S&P 500 fell 12% for its worst day since 1987, markets were busy pricing the COVID-19 recession. Nowadays the V-shaped recovery from that downturn is the main driving force behind price action.

U.S. equities notched another record close, Germany's DAX is just below its latest all-time peak and even airline and travel stocks have mostly reclaimed pre-pandemic levels.

There are potential pitfalls of course, above all the risk of an overheating U.S. economy and inflation forcing policymakers to turn less accommodative. But even if Wednesday's Fed meeting delivers a hawkish surprise, segments of the equity markets are coping quite well with higher yields.

The Dow index of "old economy" stocks, for example, gained for a seventh straight session even as 10-year Treasury yields topped 1.6% - levels deemed worrisome only a few weeks ago.

But typical pre-Fed caution has set in: U.S. yields are down just below 1.6% mark and the dollar index is flatlining. An auction of 20-year Treasury bonds bears watching.

In Europe, facing further vaccination delays due to the AstraZeneca ruckus, stocks look set to edge up.

In corporate news, focus on Credit Suisse which warned it might incur charges following the collapse of its Greensill-linked supply chain finance.

Key developments that should provide more direction to markets on Tuesday:

• Minutes of Australia's central bank said commodity price increases were unlikely to cause a sustained rise in inflation

• Bank of Japan Governor said it was important to keep long-term interest rates "stably low"

• UK economic growth will fall by 4% in the first quarter from the same period last year, the BoE governor said

• Volkswagen is confident that cost cuts will help it raise profit margins in the coming years

• Japan industrial output, trade, Tankan survey

• German wholesale prices February, March ZEW

(Danilo Masoni)

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EUROPE SEEN EDGING UP (0631 GMT)

European shares look set to open slightly higher, supported by positive sessions in Asia and Wall Street overnight, as the focus turns to central banks meetings, starting from the Fed.

The typical caution that sets in before a Fed policy decision however means markets will likely stay in a holding pattern and futures on main euro zone benchmarks were up just 0.1% at the time of writing.

Futures for the S&P 500 were flat after ending the previous session at a record high, while over in Asia, the MSCI's index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6%.

(Danilo Masoni)

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