By Stephen Culp

NEW YORK (Reuters) - U.S. stocks advanced and U.S. Treasuries oscillated within a tight range on Wednesday after data showed underlying inflation remained on its slow, downward trajectory, boosting expectations that the Federal Reserve will let interest rates stand, for now.

The S&P 500 gained modestly and interest-rate sensitive mega caps, led by Microsoft Corp (NASDAQ:MSFT), gave the tech-heavy Nasdaq the edge.

The blue-chip Dow Jones Industrial Average was essentially unchanged.

U.S. consumer price (CPI) data showed prices heated up in August due to rising energy prices, but the "core" measure, which excludes volatile food and energy items, remained on its meandering path down to the Federal Reserve's average 2% annual inflation target.

"Since markets were weak the last few days, maybe people were fearing more core inflation than we saw," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "(The report) confirms the idea of the Fed waiting to see what further data show before a possibly hiking rates in November."

"CPI was slightly positive on a core basis, but surging gasoline prices affect retail sales," Tuz added. "The extra $20 you spend filling your tank is $20 less you spend on other things."

Financial markets have priced in a 97% likelihood of the Federal Reserve standing pat at next week's monetary policy meeting, leaving the key Fed funds target rate at 5.25%-5.50%, according to CME's FedWatch tool.

The Dow Jones Industrial Average fell 10.89 points, or 0.03%, to 34,635.1, the S&P 500 gained 9.8 points, or 0.22%, to 4,471.7 and the Nasdaq Composite added 59.92 points, or 0.44%, to 13,833.53.

European shares ended lower as investors looked beyond the CPI report and a drop in euro zone industrial production to focus their attention on this week's European Central Bank policy meeting.

The pan-European STOXX 600 index lost 0.32% and MSCI's gauge of stocks across the globe gained 0.10%.

Emerging market stocks lost 0.03%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.15% lower, while Japan's Nikkei lost 0.21%.

U.S. Treasury yields were range-bound in the wake of the CPI report, which suggested the Fed will keep interest rates steady at its upcoming meeting.

Benchmark 10-year notes last rose 5/32 in price to yield 4.2445%, from 4.264% late on Tuesday.

The 30-year bond last rose 8/32 in price to yield 4.3309%, from 4.346% late on Tuesday.

The greenback steadied against a basket of world currencies following the inflation data, which did little to move the needle regarding the Fed's expected rate hike pause.

The dollar index was flat, with the euro down 0.16% to $1.0735.

The Japanese yen weakened 0.22% versus the greenback at 147.40 per dollar, while Sterling was last trading at $1.2491, up 0.06% on the day.

Oil prices dipped as a surprise U.S. inventory build helped market participants look past expectations of tight supply.

U.S. crude slipped 0.36% to settle at $88.52 per barrel, while Brent settled at $91.88 per barrel, down 0.2% on the day.

Gold prices edged lower, hovering near two-week lows after the CPI report helped give the dollar a slight boost.

Spot gold dropped 0.2% to $1,909.19 an ounce.

LONDON (Reuters) - British house prices showed the most widespread falls in 14 years in August as demand weakened against the backdrop of elevated mortgage costs and economic uncertainty, an industry survey showed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the difference between the percentage of surveyors seeing rises and falls in house prices, slumped to -68 in August from -55 in July.

Thursday's house price balance marked the weakest reading since February 2009 and was below the -56 forecast in a Reuters poll of economists.

Simon Rubinsohn, chief economist at RICS, said the survey pointed to a sluggish housing market with little sign of relief in prospect.

"Prices are continuing to slip albeit that the relatively modest fall to date needs to be seen in the context of the substantial rise recorded during the pandemic period," Rubinsohn said.

The survey results echoed other signs of slowdown in the property sector.

Mortgage lenders Halifax and Nationwide have both shown prices falling in monthly terms as the Bank of England's sustained run of interest rate rises, persistent inflation and a prolonged cost-of-living crisis squeeze home-buyers.

Official figures, released on Wednesday, showed the country's economy shrank by a sharper-than-expected 0.5% in July after public sector strikes and unusually rainy weather weighed on output.

Overall across Britain, RICS' measure of agreed sales was the weakest since April 2020 when much of the property sector was on lockdown due to the COVID-19 pandemic, and new buyer enquiries fell marginally from the month before.

In the rental market, tenant demand continued to outstrip landlord instructions, limiting the number of available homes to rent, while a net balance of +60% surveyors expect to see a rise in rental prices over the coming three months.

Separate figures from property website Zoopla on Thursday showed the joint-highest rental affordability squeeze, with tenants spending 28.4% of their earnings in July on rent.

By Prerana Bhat

BENGALURU (Reuters) -The Federal Reserve will leave its benchmark overnight interest rate unchanged at the end of its Sept. 19-20 policy meeting and probably wait until the April-June period of 2024 or later before cutting it, according to economists in a Reuters poll.

Fed Chair Jerome Powell underscored the "higher-for-longer" mantra for rates in a speech at the annual Jackson Hole central banking symposium in August and maintained another rate hike might still be needed to bring inflation down to the 2% target.

But other members of the rate-setting Federal Open Market Committee (FOMC), including some of the more hawkish ones, have raised the possibility of holding off on another rate hike to allow more time to gauge the impact of the cumulative 525 basis points of tightening delivered by the Fed since March 2022.

More than 95% of economists, 94 of 97, in the Sept. 7-12 Reuters poll predicted the U.S. central bank would hold the federal funds rate in the current 5.25%-5.50% range next week, in line with market expectations.

Still, nearly 20% of the economists, 17 of 97, predicted at least one more rate rise before the end of the year, including three who expected one this month.

"Though we continue to expect the Fed to remain on hold at the Sept. 20 FOMC meeting, we would not be surprised to see most officials continue to project one more rate hike by year-end in their updated 'dot plot,'" said Brett Ryan, senior U.S. economist at Deutsche Bank, referring to the interest rate projections released by Fed policymakers on a quarterly basis.

"While there has been meaningful progress to date on inflation ... the Fed will not be able to take this for granted."

Much of the immediate outlook for Fed policy will depend on the release on Wednesday of Consumer Price Index (CPI) data for August. The CPI was expected to have risen 0.6% last month, after a 0.2% rise in July, according to economists polled by Reuters. If realized, that would mean an acceleration in the annual rate to 3.6% from 3.2%.

JOB MARKET

The unemployment rate rose to 3.8% in August, raising hopes among those who don't want to see another rate hike that the U.S. labor market was finally cooling.

But the Reuters poll of economists forecast that the jobless rate would average 3.7% this year and rise only slightly to 4.3% in 2024, suggesting the Fed even then will not be far off its goal of full employment.

House prices and rents were also expected to remain elevated now that a relatively brief U.S. housing market correction appears to be over, according to a separate Reuters poll.

That may put the brakes on further declines in inflation, which is not predicted to reach the Fed's target until at least 2025.

That suggests rate cuts may still be a long way off.

Of the 87 respondents who had forecasts until the middle of 2024, 28 put the timing of the first rate cut in the first quarter and 33 had it in the quarter after that. Only one said the Fed would cut rates this year.

Around 70% of those respondents, 62 of 87, had at least one rate cut by the end of next June. Still, all but five of 28 respondents to an extra question said the bigger risk was that the first Fed cut would come later than they currently forecast.

"Tight labor and housing markets present upside risk to inflation ... That means that absent a recession, policymakers are likely to keep policy rates on hold well into 2024," said Andrew Hollenhorst, chief U.S. economist at Citi.

A serious economic downturn could justify an earlier rate cut, but that is looking less likely. The economy was expected to expand by 2.0% this year and 0.9% in 2024, according to the poll.

The median view from a dwindling sample of economists who provided responses on the probability of a recession within one year fell further to 30%, after tumbling below 50% for the first time in nearly a year last month. It peaked at 65% in October 2022.

"In our base-case forecast, the economy enters recession in the first half of next year, which would have the Fed cutting by Q2. But the risk is that growth holds up and the first cut is pushed out later," Citi's Hollenhorst said.

(For other stories from the Reuters global economic poll:)

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. consumer prices likely increased by the most in 14 months in August amid a surge in the cost of gasoline, but an expected moderate rise in underlying inflation could encourage the Federal Reserve to keep interest rates on hold next Wednesday.

The consumer price report from the Labor Department on Wednesday will be published a week before the Fed's rate decision. It would follow on the heels of data this month showing an easing in labor market conditions in August.

Prices outside the volatile food and energy categories, the so-called core inflation, were likely tame for a third straight month, with the year-on-year increase forecast to have been the smallest in nearly two years.

"It's going to be a mixed picture, with headline inflation picking due to higher gasoline prices and core inflation remaining contained," said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina. "The Fed would be encouraged by the continued moderation trend in core inflation, but it's still too high."

The consumer price index likely increased by 0.6% last month, according to a Reuters survey of economists. That would be the largest gain since June 2022 and would follow two straight monthly advances of 0.2%.

Gasoline prices accelerated in August, peaking at $3.984 per gallon in the third week of the month, according to data from the U.S. Energy Information Administration. That compared to $3.676 per gallon during the same period in July.

Food prices are expected to have continued rising at a moderate pace. In the 12-months through August, the CPI is forecast to have jumped 3.6% after climbing 3.2% in July. While that would mark the second straight month of a pick up in annual inflation, year-on-year consumer prices have come down from a peak of 9.1% in June 2022. The Fed has a 2% inflation target.

The core CPI, excluding food and energy, is forecast to have increased 0.2% for a third straight month amid declining prices for used cars and trucks. Though rents continued to increase, the trend is cooling and a further slowdown is expected as more apartment buildings come on the market.

In the 12 months through August, the core CPI is forecast to have increased by 4.3%. That would be the smallest year-on-year rise since September 2021 and would follow a 4.7% gain in July.

Financial markets overwhelmingly expect the Fed to leave its policy rate unchanged next Wednesday, according to CME Group's (NASDAQ:CME) FedWatch tool. Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.

Details on services inflation could, however, leave the door open for a rate hike in November. Airline fares were unlikely to repeat the steep declines recorded in June and July. The cost of hotel and motel rooms likely rebounded amid strong summer demand. That probably kept services inflation, excluding shelter, elevated last month.

Some economists believe inflation risks are tilted to the upside, citing rising insurance costs, especially for motor vehicles. Health insurance costs in the CPI report are expected to rise from October after the Labor Department's Bureau of Labor Statistics, which compiles the report, recently announced changes to its methodology for measuring these costs.

"Under our new forecast for CPI health insurance, we continue to expect core CPI and especially core services ex. housing inflation to accelerate in the coming months but to slow more quickly next spring," said Ronnie Walker, an economist at Goldman Sachs, in a note.

A strike in the automobile sector could disrupt supply chains and boost motor vehicle prices if it lasted more than a month, economists said. United Auto Workers members last month voted overwhelmingly in favor of authorizing a work stoppage at General Motors (NYSE:GM), Ford Motor (NYSE:F) and Stellantis (NYSE:STLA) , if an agreement over wages and pension plans was not reached before the current four-year contract expires on Sept. 14.

"While we all appreciate that the house and renting story is going to be an increasingly important theme that will help suppress core inflation in coming months and quarters, I'm just a little bit nervous because of these factors," said James Knightley, chief international economist at ING in New York.  

(Reporting Lucia Mutikani; editing by Timothy Gardner)

SEOUL (Reuters) - South Korea's financial authorities said they would control household debt by tightening certain loan regulations, as rising mortgage demand drove up household borrowing by the biggest amount in two years in August.

Total household borrowing from banks stood at 1,075.0 trillion won ($810.94 billion) at the end of August, up 6.9 trillion won over the month, central bank data showed on Wednesday.

It exceeded the previous month's 5.9 trillion won increase and the biggest since July 2021, according to the Bank of Korea. Household borrowing has been rising since April.

The country's financial regulator held a meeting on Wednesday with related ministries and agencies to discuss ways to prevent further expansion of household debt, it said in a statement.

The Financial Services Commission said it would introduce measures against misuses of long-term mortgage loans, a stricter debt-to-service ratio for loans on floating rates, and tighter qualification criteria for the government's temporary policy mortgage loan.

In August, mortgage loans grew for a fifth straight month and by 7.0 trillion won, the biggest since February 2020, while other loans fell by 0.1 trillion won in their 21st month of decline.

South Korea's central bank held interest rates steady for a fifth straight meeting in August, as it tries to balance softer inflation with heightened risks to economic growth. Bank of Korea Governor Rhee Chang-yong said rate hikes would remain a secondary option for dealing with rising household debt.

($1 = 1,325.6300 won)

By Leika Kihara

TOKYO (Reuters) -Japan's annual wholesale inflation slowed in August for the eighth straight month, data showed on Wednesday, offering some relief for households and retailers hit by past sharp rises in raw material imports.

The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, rose 3.2% in August from a year earlier, matching a median market forecast.

It slowed from a revised 3.4% rise in July, and is now off a peak 10.6% year-on-year surge hit in December last year, data by the Bank of Japan (BOJ) showed.

"While crude oil prices remain high and yen falls continue, wholesale inflation is slowing ... and could post a year-on-year decline in the fourth quarter," said Toru Suehiro, an economist at Daiwa Securities.

"The price declines seen for some goods can't be ignored" as it could affect households' perception of future price moves, he added.

Rising wholesale prices, driven by last year's surge in global commodity costs and the weak yen, have pushed up Japan's broader consumer inflation by prodding many firms to charge households more for their goods.

While consumer inflation has remained above the BOJ's 2% target for more than a year, the central bank has stressed the need to keep ultra-loose monetary policy until such supply-driven rise in prices is replaced by an increase backed by domestic demand.

By Saeed Azhar and Lananh Nguyen

NEW YORK (Reuters) -Goldman Sachs CEO David Solomon said the U.S. economy is likely to avoid a significant recession, but warned that inflation will likely be more persistent than market participants currently expect.

"The chance of having a relatively soft landing and navigating through this has gone up very meaningfully over the last 12 months," Solomon told Reuters in an interview on Tuesday. "The environment is definitely better."

The Federal Reserve has tamed inflation via interest rate increases, but it may need to take further action, he said.

"I have a personal point of view that inflation is going to be a little bit more sticky than the more optimistic views," Solomon said. "There's still work to do."

The current trajectory of the U.S. Treasuries' forward curve shows rates declining in the future, but Solomon cautioned that might not materialize.

"You have to recognize it's still very uncertain," he said.

Fed funds futures traders largely show the Fed will keep rates on hold until May or June next year, when traders expect the central bank will start cutting rates.

Still, optimism that the U.S. economy will avoid a recession is leading to a reopening of capital markets, Solomon said.

"You’re seeing now this month a bunch of significant IPOs in the market," said Solomon, who noted that Goldman was involved in most of the initial public offerings. "They're meaningful, they're going well," he said.

Arm, the chip designer owned by SoftBank (TYO:9984) Group Corp, is close to raising about $5.4 billion in New York in what might be the biggest IPO of 2023. The IPO will price on Wednesday.

Mergers and acquisitions likely will be slower to resume because uncertainty weighs on companies making strategic decisions.

"People are starting to open up to a better environment and think a little bit more forward strategically, but there's a lag time," Solomon said.

Solomon criticized U.S. proposals that would raise capital requirements for larger banks, echoing comments from his counterparts.

Michael Barr, the Federal Reserve's top regulatory official, told Congress in May that the central bank would unveil its plan to ratchet up capital rules for banks this summer and ensure supervisors more aggressively police lenders following regional bank failures earlier this year that required the government intervention.

"I do think these capital rules will have an impact on economic growth and that will affect large businesses and small businesses and their access to capital," Solomon said. "It'll push some activity out of the banking system if they're implemented."

JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon blasted the proposed rules, telling investors on Monday that they could prompt lenders to pull back and stymie economic growth.

If implemented, the regulations could increase Goldman's capital requirements by slightly more than 25%, Solomon told an investor conference later Tuesday.

The bank will take more writedowns on its commercial real estate portfolio in the third quarter, but amount will be lower than in the second quarter, when CRE weighed on its earnings.

Solomon also spoke about departures of senior bankers, citing historic instances of turmoil when Goldman combined or reshuffled businesses.

"Whenever you put businesses together, there's going to be disruption and there's going to be volatility," he said.

Goldman Sachs has seen several exits since it reorganized into three units last year and scaled back ambitions for its consumer business, which has lost $3 billion in the last three years.

By Andy Bruce and David Milliken

LONDON (Reuters) -Britain's labour market showed more signs of cooling in the three months through July, even as data showing another month of strong pay growth left the Bank of England (BoE) on track for a further interest rate hike next month.

The unemployment rate rose, the number of people in work fell sharply and vacancies dipped below 1 million for the first time in two years, the Office for National Statistics (ONS) said on Tuesday.

It was another record month for pay growth, however - which most investors think will prompt the BoE to raise interest rates again on Sept. 22 to 5.5% from 5.25%, perhaps for the last time in the current cycle.

"The bigger question is about the path thereafter," said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.

"The Bank will be reluctant to keep tightening if they've watched other central banks around the world hit pause. Yet if incoming data doesn't turn definitively, another hike to a terminal rate of 5.75% is absolutely on the table."

Last week BoE Governor Andrew Bailey said the central bank is "much nearer" to ending its run of rate increases but borrowing costs might still have further to rise because of stubborn inflation pressures.

The unemployment rate rose to 4.3% in the three months to July from 4.2% a month earlier, its highest since the three months to the end of September 2021, the ONS said.

The jobless rate is already higher than the 4.1% the BoE had pencilled in for the third quarter as a whole, when it published its last set of forecasts in early August.

Employment dropped by a greater-than-expected 207,000 in the three months to July, the biggest such fall since the three months to October 2020, the data showed.

Wages continued to rise quickly, and above the rate of inflation. Pay packets excluding bonuses were 7.8% higher than a year earlier - the joint-fastest rate since ONS records began in 2001 and in line with economists' forecasts in a Reuters poll.

Including bonuses, pay rose by 8.5% compared with the 8.2% consensus, boosted in part by backdated pay for healthcare workers. Adjusting for consumer price inflation it grew 0.6% - the first positive number since March 2022.

While good news for workers, the level of pay in real terms remains no better than it was more than 15 years ago - a historically dismal record.

"Wage growth remains high, partly reflecting one-off payments to public sector workers, but for real wages to grow sustainably we must stick to our plan to halve inflation," finance minister Jeremy Hunt said.

The pound showed little reaction to the data.

By Leika Kihara

TOKYO (Reuters) - The Bank of Japan is under pressure to defend a new cap for long-term interest rates set just six weeks ago, as Governor Kazuo Ueda's hawkish remarks heightened market expectations of a near-term end to its negative interest rate policy.

In an interview on Saturday, Ueda said the BOJ could have enough data by year-end to determine whether it can end negative rates, shocking markets that did not see such a move as imminent.

Below are the tools the BOJ is expected to use to combat sharp rises in bond yields, what happens next on monetary policy and factors that could determine the timing of a rate hike:

WHAT WOULD TRIGGER BOJ ACTION IN THE JGB MARKET?

After its forceful defence of a 0.5% cap drew criticism for distorting markets and fuelling an unwelcome yen fall, the BOJ tweaked its yield control policy in July to allow the 10-year Japanese government bond (JGB) yield to rise by up to 1%.

Ueda had described the 1% limit as a protective cap that likely won't be hit any time soon given a fragile economy. But his hawkish remarks have pushed up the 10-year JGB yield to a near decade-high of 0.715% on Tuesday.

The BOJ will mainly focus on the speed of moves and step in, mainly through emergency bond buying operations, to curb sharp rises in yields, say sources familiar with its thinking. It also likely sees 0.8% as a threshold it wants to defend to avoid the 10-year yield from reaching 1%.

WHAT ABOUT OTHER ZONES OF THE YIELD CURVE?

The BOJ is also keen to prevent any sharp rise in yields for short- and medium-term notes, as they have a big impact on corporate borrowing costs.

To curb rises in the shorter end of the yield curve, it will offer two- or five-year loans against collateral to banks, a move aimed at encouraging investors to buy five-year bonds with loans carrying lower rates.

WHAT ARE KEY DATA AVAILABLE TOWARDS YEAR-END?

Inflation hit 3.1% in July, exceeding the BOJ's 2% target for the 16th straight month. But the bank sees the increase as driven mostly by supply factors such as import costs, and wants more assurances that Japan will sustain 2% inflation underpinned by consumption.

The outlook of next year's wages is therefore key. Japanese firms traditionally kick off their annual wage negotiations with unions in March. But some clues will be available this year.

Japan's largest labour organisation Rengo will lay out in early December its target for next year's wage hike, which will set the standard for wage talks between management and unions.

The BOJ will also scrutinise economic data and corporate earnings for clues on whether Japan's recovery is strong enough to weather the hit from slowing global demand.

WHAT WILL HAPPEN NEXT?

If the BOJ is convinced Japan can sustain 2% demand-driven inflation, the next step is to ditch or hike a 0% target set for the 10-year bond yield, and raise short-term rates to zero from -0.1%.

There is no consensus within the BOJ on when and in what order it would dismantle the complex framework crafted under former Governor Haruhiko Kuroda. The bank's staff is brainstorming various ideas that will be brought to the board for debate once conditions fall in place to exit ultra-loose policy.

Given Japan's dire fiscal state, the priority would be to avoid an abrupt, sharp rise in long-term rates that boosts the cost of financing the country's huge debt.

That could mean the BOJ will retain the yield cap as a precaution when it raises short-term rates, some analysts say.

WHEN WOULD BOJ NEXT SEND SIGNALS?

There are no scheduled public appearances of BOJ executives until governor Ueda's regular news conference, to be held after the BOJ's next two-day policy meeting ending on Sept. 22.

Japan's August consumer price data is also due on Sept. 22.

By Vivek Mishra

BENGALURU (Reuters) - China's economy will grow less than previously thought this year and next as a struggling property market dogs what was once the world's growth engine, according to a Reuters poll of economists who said the risks were skewed to further downgrades.

The world's second-largest economy has been struggling after a brief post-COVID recovery, dragged by huge debt due to decades of infrastructure investment and a property downturn, posing risks not only to itself but also to the global economy.

With 70% of household wealth tied up in the ailing property market, coupled with rising youth unemployment, weak consumption demand and the reluctance by depressed private firms to invest, policymakers have been fighting an uphill job in reviving growth.

"The primary culprit is the property sector. This source of growth has now evaporated and won't be coming back," said Julian Evans-Pritchard, head of China economics at Capital Economics in Singapore.

"We have long been more bearish than most...but even we have been surprised by the speed at which growth has declined. The deceleration probably still has further to run."

The Sept. 4-11 Reuters poll of 76 analysts, based in and outside mainland China, predicted the economy would grow 5.0% this year, lower than 5.5% forecast in a July survey. Forecasts ranged between 4.5% and 5.5%.

While nearly all economists lowered their growth outlook for this year and next compared with the previous survey, the magnitude of those cuts was still marginal, leaving room for more downgrades.

Some economists cautioned the government's growth target of around 5% for this year could be missed as the drip-feed of policy stimulus from Beijing would not be enough to stabilise the economy.

While recent data showed signs of improvement in the economy, some economists said more policy support was needed for the ailing property sector. The sector accounts for roughly a quarter of China's economy.

Growth was forecast to slow to 4.5% next year and 4.3% in 2025. After expanding 6.3% last quarter, the economy was expected to grow just 4.2% this quarter, followed by 4.9% in the next, and down to just 3.9% in the first quarter of 2024.

"This slowdown could be just the tip of the iceberg," said Bingnan Ye, senior economist at China Merchants Bank International in Hong Kong, who added the downside risk was "household consumption may improve more slowly than many expect."

"Along with a slowdown in the property sector and exports, we still have U.S.-China trade tensions, and the recent diversification of supply chains beyond China will add to the downside pressure."

A strong majority of economists who answered an additional question said the risks to their 2023 and 2024 GDP growth forecasts were skewed to the downside.

Economists also cut their consumer price inflation forecast to 0.6% for this year and 1.9% for next year, down from the previously expected 1.1% and 2.1% in the July survey.

Despite low inflation, the People's Bank of China was expected to keep its key interest rates on hold this year.

Asked whether there would be an aggressive economic stimulus package from authorities, over three-quarters of economists, 17 of 21, said no.

"Local governments, which are responsible for (about) 85% of expenditures, are heavily indebted. This constrains the ability...to provide meaningful stimulus without further undermining their already fragile finances," said Teeuwe Mevissen, senior macro strategist at Rabobank in the Netherlands.

(For other stories from the Reuters global economic poll:)