While you were sleeping: UPDATED Stocks hover, bonds rise as Fed hike looms

Wall Street was mixed and US Treasury bonds declined as investors geared up for a two-day meeting of Federal Reserve policymakers to gauge the pace of interest rate increases this year.

Fed chairwoman Janet Yellen recently signalled that the Federal Open Market Committee will raise the central bank's key interest rate during the meeting. 

“Although the Fed rate hike is priced in at 100%, the Fed watchers will be focused on the dot plot to catch any hints regarding the future of the Fed policy,” Ipek Ozkardeskaya, a market analyst at London Capital Group, wrote in a note, Bloomberg reported.

“The Fed could steepen the rate normalisation in 2017 and hike rates more than three times as anticipated until the beginning of March."

Wall Street was mixed. At the close of trading in New York, the Dow Jones Industrial Average fell 21.50 points, 0.1%, to 20,881.48. The Nasdaq Composite Index added 0.2% to 5875.78 and the Standard & Poor’s 500 Index rose less than a point to 2373.47.

In the Dow, declines in shares of Intel and those of Merck, down 2.1% and 1.5% respectively, outweighed advances in shares of Caterpillar and those of the Home Depot, up 0.5% and 0.4%.

Intel fell after the chip maker struck a $US15.3 billion deal to buy Mobileye, which makes technology for self-driving cars. Mobileye shares soared 28% to $US60.62.

Merck slid with other health care stocks as investors awaited the release of a Congressional Budget Office report on the cost estimates of the House Republicans' proposed health care bill.

"There is a lot of uncertainty in the health care sector," Brant Houston, managing director at CIBC Atlantic Trust Private Wealth Management in Colorado, told Reuters. 

"Until this whole debate plays out, investors are going to be a little bit concerned about how these stocks will perform."

Bond yields at highest since 2014
US Treasuries slid, pushing the yield on 10-year notes one basis point higher to 2.609%, the highest close since September 2014. 

US crude oil futures for April delivery fell 0.2% to $US48.40 a barrel, after losing 9% of their value last week. 

In Europe, the Stoxx 600 Index finished the day with 0.4% increase from the previous close.

France’s CAC 40 Index gained 0.1%, Germany’s DAX Index rose 0.2%, while the UK’s FTSE 100 Index advanced 0.3%.

In the Netherlands, the benchmark AEX Index rose 0.2% to close at the highest level in more than nine years ahead of elections on Wednesday.

While most opinion polls show Geert Wilders' anti-Islam, anti-European Union Freedom Party has lost the lead in recent weeks, Prime Minister Mark Rutte warned Mr Wilders might still win the most seats in parliament.

“I do believe there is a real risk we can wake up” on Thursday to find Mr Wilders is the leader of the biggest party, Mr Rutte told an audience of international journalists, Bloomberg reported.

Shares of Ros Agro closed 1.6% weaker in London after the Russian publicly-traded farm company warned that its margins will “continue to be challenged” this year because of the strong rouble and abundant agricultural crops in Russia.