* Trading cautious ahead of Fed decision on Wednesday
* Autos fall on U.S. demand worries, strong euro
* Energy stocks track oil prices higher
By Sitaraman Shankar
LONDON, June 24 (Reuters) - European shares dipped early on
Tuesday, as losses in auto and utility stocks offset energy
shares that tracked crude oil higher, with trading cautious
ahead of a key two-day Federal Reserve rate-setting meeting.
At 0830 GMT, the FTSEurofirst 300 index of top European
shares was down 0.2 percent at 1,220.31 points after ending the
previous session flat.
Auto stocks fell on worries over U.S. demand and a stronger
euro, with Daimler <DAIGn.DE>, BMW <BMWG.DE> and Fiat <FIA.MI>
losing 2-4 percent.
"Markets feel as if they have been consolidating for the
past few sessions, wondering if there could be light at the end
of a darkening tunnel," said Darren Winder, head of macro and
strategy research at Cazenove.
"The oil price is a key consideration in that and we seem to
be stuck in the $130s, which could have a significant impact on
inflation development in the second half."
BP <BP.L>, Shell <RDSa.L> and Total <TOTF.PA> gained 0.8-1.0
percent as crude rose more than $1 a barrel to around $138.
Dutch semiconductor equipment maker ASML <ASML.AS> was
another prominent gainer, rising 3.7 percent jump after Goldman
Sachs upgraded the stock.
Miners gained as gold rose $4 per ounce. Rio Tinto <RIO.L>
rose 1.6 percent and BHP Billiton 1.8 percent.
Across Europe, Britain's FTSE <> was up 0.1 percent,
bolstered by commodity stocks, but Germany's DAX <> and
France's CAC <> were both down 0.4 percent.
FED AHEAD
The Federal Reserve, which has cut borrowing costs by 2.25
percentage points so far this year, is expected to keep rates
steady at 2 percent, but is being watched closely for the
signals it sends on future policy.
"The Fed will be watched to see if there is any change in
emphasis on growth versus inflation...we've been getting more
hawkish talk from Fed on inflation in recent weeks and we don't
think anyone is expecting them to cut rates," said Winder.
The U.S. central bank is due to make its announcement at
1815 GMT on Wednesday.
Analysts say that rising yields on government bonds are
increasingly pressuring equity valuations, and Winder said that
telecoms and tobacco stocks, in particular, were losing their
yield attractiveness.
Swedish truckmaker Volvo <VOLVb.ST> fell 4.3 percent after
delivery numbers for May disappointed, while among mid-caps,
British department stores group Debenhams <DEB.L> rose 7 percent
after like-for-like sales rose by more than expected in the last
10 weeks.
The FTSEurofirst 300 has fallen nearly 9 percent this month,
marking the fifth down month out of six this year.
The index is down 19 percent for the year, taken lower by
concerns over bank capital increases stemming from credit-market
related losses, and by worries over the economy and inflation
pressures due to soaring oil costs.
(Reporting by Sitaraman Shankar; Editing by Erica Billingham)
