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U.S. stocks lower in early New York trading

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Yuan tumbles as China factory activity unexpectedly shrinks

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Investors looking at likely 75 bps Fed hike on Wed

(New throughout, updates prices, market activity and comments; new byline, changes dateline, previous LONDON)

NEW YORK, Oct 31 (Reuters) - A global stock index fell and U.S. Treasury yields edged up on Monday as investors prepared for the U.S. Federal Reserve to stick with its aggressive approach to raising interest rates this week.

The dollar advanced against the euro and Japanese yen.

The Fed, which begins its two-day meeting Tuesday, is expected to deliver a fourth straight 75-basis-point rate hike on Wednesday in its attempt to tame inflation. Investors will also focus on the communication of the outlook.

Some investors have been entertaining the idea the Fed could pause its rate hikes or at least shift to a less aggressivee hiking campaign, and those views have helped support stocks recently. Others see little evidence to support that view.

"The bond market has continued to doubt that the Fed is ready to either slow interest rate increases or actually move to the sidelines," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan, adding that markets had gotten ahead of themselves.

Investors also were digesting data released Monday that showed eurozone inflation came in hotter than expected and also, separately, data that showed China's factory activity unexpectedly fell in October.

The Dow Jones Industrial Average

fell 71.99 points, or 0.22%,

to

32,789.81

, the S&P 500

lost 22.07 points, or 0.57%,

to

3,878.99

and the Nasdaq Composite

dropped 127.16 points, or 1.15%,

to

10,975.29

.

Quarterly results from S&P 500 tech and growth companies have so far been mixed this earnings season, adding to volatility in U.S. stocks, but on Friday the Dow recorded its strongest weekly percentage gain since May.

The pan-European STOXX 600 index

rose 0.48

% and MSCI's gauge of stocks across the globe

shed 0.32

%.

The yield on two-year notes, which typically moves in step with rate expectations, was up 7.5 basis points at 4.497% while the 10-year yield rose 3.6 basis pointsto 4.046%.

Russia's withdrawal from a deal to allow Ukrainian grain shipments to reach global buyers at the weekend saw wheat futures leap more than 8% at one point, before paring gains.

Moscow suspended its participation in the Black Sea deal on Saturday in response to what it called a major Ukrainian drone attack on its fleet in Russia-annexed Crimea.

Twelve ships carrying grain did though manage to leave Ukrainian ports on Monday, suggesting Moscow had stopped short of reimposing a full-scale blockade for now.

In currencies, the euro was down 0.73% to $0.989.

The Japanese yen

weakened 0.91%

versus the greenback at

148.83

per dollar.

The yuan slumped earlier after the Chinese factor activity data. The resignation of the chair of Beijing-based property developer Longfor Group also unnerved investors.

Investor focus was also on Brazil's markets after leftist leader Luiz Inacio Lula da Silva narrowly defeated right-wing President Jair Bolsonaro in a runoff election on Sunday.

Speculation swirled around the makeup of Lula's cabinet and the risk that Bolsonaro disputes the narrow result. U.S.-listed shares of oil major Petrobras were down 2% in morning New York trading.

U.S. crude recently

fell 0.59% to

$

87.38

per barrel and Brent was at $

95.18

,

down 0.62%

on the day.

(Additional reporting by Marc Jones in London, Herbert Lash in New York and Tom Westbrook in Singapore; Editing by Kirsten Donovan, Angus MacSwan and David Gregorio)