Trading is likely to be slow this morning as investors await the latest interest rate announcement from the U.S. Federal Reserve due this afternoon.

Economists don’t expect the Fed to make any changes to short term rates, which are at four-decade lows. But the Fed’s accompanying monetary statement will be closely scrutinized for signs of economic confidence.

There’s been a big reduction in risk appetite over the past few months, says some analysts, due to criticism about high stock prices amid mixed economic signals.

Evidence for caution was released this morning from the U.S. Housing department, which says that home construction tumbled for a second month in a row in February, taking a larger-than-expected drop. Housing starts fell by 4% to a seasonally adjusted 1.855 million annual rate, says Commerce. The decline was also accompanied by a decrease in building permits.

The report was weaker than many analysts had expected. The U.S. housing sector has been strong for the past several years, fueled by low interest rates.

Here at home the news is better. Statistics Canada is reporting that although shipments edged down 0.2% to $45.5 billion in January, manufacturers saw some positive signals during the month. New orders rose for the second consecutive month, while inventories increased for the second time in the last nine months.

Thirteen of the 21 manufacturing industries, accounting for 43% of total shipments, reported decreases in January. Although the decline was concentrated in the big-ticket, durable goods sector (-1.2%), this was largely offset by rising industrial prices and higher non-durable goods manufacturing (+1.3%).

In Europe at midday stocks are mostly up. Paris’s CAC40 Index is 0.2% higher, at 3,580.21.In Frankfurt, the Xetra DAX Index has edged up 0.1% to 3,816.5, after initially sliding into negative territory.

In London, the FTSE100 Share Index has slipped slightly, down 0.1% to 4,417.9, following news that Britain’s inflation rate fell by 0.1 percentage point to 1.3% in February.

Asian stock markets closed lower after Tuesday’s declines on Wall Street. Tokyo’s Nikkei Stock Average fell 75.61 points, or 0.67%, to 11,242.29 points. In Hong Kong, stocks closed slightly higher after five straight sessions of losses. The Hang Seng edged up 13.21 points, or 0.1%, to 12,932.62.

On Monday, the Toronto market was hit by a tumble in Nortel Networks shares. Nortel dropped $1.60 to $6.98 on heavy volume of 98.9 million shares after the tech giant put its chief financial officer and its controller on paid leave of absence while its financial statements are re-examined. The S&P/TSX composite index dropped 157.63 points to 8,434.41.

In New York, the Dow Jones industrial average fell 137.19 points to 10,102.89. The Nasdaq fell 45.53 points to 1,939.2 while the S&P 500 index dropped 16.08 at 1,104.43.