September 20, 2006	Wednesday	Sha'aban 26, 1427

LONDON, Sept 19: European stock markets fell on Tuesday as investors looked to bank profits on the eve of a rate decision by the US Federal Reserve, dealers said.

Traders were reacting to news also that OMX, which groups all the Scandinavian stock exchanges except Oslo, has signed an agreement in principle to buy the Icelandic stock exchange.

London's FTSE 100 index of leading shares dropped 0.26 per cent to 5,874.80 points, Frankfurt's DAX 30 lost 0.28 per cent to 5,909.86 points, while in Paris the CAC 40 index shed 0.26 per cent to 5,133.81.

The DJ Euro Stoxx 50 index of leading eurozone shares decreased 0.27 per cent to 3,798.26 points.

The euro stood at $1.2675.

Wall Street shares had ended little changed on Monday as traders digested last week's gains and braced for Wednesday's Fed meeting on interest rates, dealers said.

Most investors expect policymakers to keep the federal funds rate unchanged at 5.25 per cent, but the central bank's statement may provide clues as to the outlook for future rate actions. The bank paused in August after 17 straight quarter-point rate hikes.

Japanese share prices closed mixed on Tuesday as investors, returning to their desks after a long holiday weekend, locked in profits on earlier gains after news that land prices in Japan's cities rose for the first time since 1990, dealers said.

In Europe meanwhile, the OMX and the Icelandic stock exchange said their tie-up deal was a further step towards an integrated Nordic and Baltic securities market.

OMX said that its offer was worth 2.45 billion Icelandic kronur (27.55 million euros, 35.0 million dollars) in new shares, excluding any spare cash in the Icelandic company and the effect of convertible shares.

Across the Atlantic on Monday, the Dow Jones Industrial Average dipped 0.05 per cent to close at 11,555.00 points, while the tech-heavy Nasdaq composite edged up 0.01 per cent to 2,235.75.

The broad-market Standard and Poor's 500 index rose 0.10 per cent to 1,321.18.

In Asia on Tuesday, the Tokyo Stock Exchange's benchmark Nikkei-225 index rose 0.05 per cent to 15,874.28 points. The broader TOPIX index of all first-section stocks eased 0.09 per cent to 1,591.98.—AFP