Stocks retreat ahead of Fed meeting, Scottish referendum

European stocks pointed lower early Monday ahead of the Federal Reserve policy meeting this week  amid increasing concerns over the Scottish independence referendum.

The U.S. markets had its first negative week in six last week, while energy and utilities sectors had been under pressure, while commodity prices had been on downside trajectory last week or so, while Chinese manufacturing data has signaled further weakens for August. The trade remains quite choppy as we anticipate further clues over Scottish independence referendum, the Alibaba IPO and of course the FOMC meeting on Thursday.

As of 04:33 am ET, the  Stoxx 600  index was down  0.05%  lower around 344.07. The pan-European benchmark was little changed compared with last week`s lackluster performance, which was the worst since five, with energy and telecommunications services as well as industrials leading the slump among the sectors. The European bourses were mostly lower as follows:

- Britain`s  FTSE 100  fell  0.11%  to 6,802.56

- France`s  CAC 40  fell  0.25%  to 4,430.42

- Germany`s  DAX 30  was flat around 9,652.24

The weekly decline came on the heels of growing uncertainty over central bank stimulus policies ahead of the a Scottish referendum this week, as polls currently show the referendum too close to call with both sides campaigning hard over the weekend. The vote, that might trigger a split of the union after more than three centuries, is held Thursday with the result expected on Friday morning.

Volatility is expected to dominate the weekly trade ahead of the referendum outcome, while traders will be carefully anticipating the Fed`s policy meeting, which convenes Tuesday and Wednesday.

In the US, the Federal Open Market Committee is expected to wind down its stimulus program, but Janet Yellen, the Fed Chairwoman, has a chance to explain what comes next when she holds a news conference following the FOMC`s policy outcome on Wednesday.

Another negative vibe was coming out of China, where  Industrial production growth slowed to its lowest level since pre-crisis levels, according to data released Saturday, along with weaker fixed-asset investment, retail and real estate sales reports, adding pressure on Beijing to increase stimulus measures to spur growth in the country.

According to the National Bureau of Statistics, industrial production rose 6.9% from a year earlier, compared with the 9.0% in July and analysts` average forecast of 8.8%. 

Fixed-asset investment in nonrural China rose 16.5% from a year ago, slower than the 17.0% increase in July. Separately, retail sales also expanded 11.9% from a year ago, yet down from the 12.2% level in July.

On the equity front, investors will be closely watching the Chinese E-commerce giant  Alibaba road-showing around the world this week in its effort to raise more than $21 billion for its initial public offering, one of the biggest on record.

According to a Bloomberg report, the group is planning to increase the size of its IPO due to strong investor demand, with a new top end o the price range to above $70.