World shares mixed as Brexit keeps lid on markets

Wall Street was mixed overnight ahead of the UK's referendum on the country's membership in the European Union.

US Federal Reserve Chair Janet Yellen's semi-annual testimony before lawmakers, on Tuesday and again on Wednesday, underpinned expectations the central bank won't be in a rush to raise interest rates, as she signalled concern over low productivity even as she remained upbeat about the outlook for the US economy.

Futures indicate 44 percent odds that the Fed will tighten policy this year, down from 76 percent probability at the start of the month, according to Bloomberg.

"We think that the US economy is in good shape, despite some setbacks in very recent months," International Monetary Fund Director Christine Lagarde said in prepared remarks following a review of the world's largest economy.

Even so, Lagarde warned that the US labour force participation is declining, as has productivity growth.

"All in all, our assessment is that, if left unchecked, these four forces-participation, productivity, polarisation, and poverty-will corrode the underpinnings of growth (both potential and actual) and hold back gains in US living standards," Lagarde noted.

Wall Street was mixed. In 2.13pm New York trading, the Dow Jones Industrial Average slipped 0.08 percent. The Nasdaq Composite Index eked out a 0.08 percent gain. In 1.58pm trading, the Standard & Poor's 500 Index rose 0.12 percent.

The Dow moved lower as slides in shares of McDonald's and those of IBM, down 1.7 percent and 0.8 percent respectively, outweighed gains in shares of Merck and those of DuPont.

"We are clawing back some of the losses from last week and are in a bit of a holding pattern ahead of tomorrow's vote," Art Hogan, chief market strategist at Wunderlich Securities in New York, told Reuters. "I think if there is a 'Leave' vote, then a July rate hike is definitely off the table and we might be looking at just one hike in December."

Europe's Stoxx 600 Index ended the session with an advance of 0.4 percent from the previous close, paring some of its earlier gains amid fresh polls on Thursday's referendum indicating British voters might be leaning towards a Brexit.

Yellen warned that a Brexit could have "significant economic repercussions," according to news reports.

"If the country decides to stay within the EU, growth is expected to rebound later this year and to remain steady over the next few years," the IMF said last week. "Inflation should gradually rise to target after the effects of past oil and other commodity price falls dissipate and as low unemployment helps push up wages.

The UK's FTSE 100 index increased 0.6 percent, as did Germany's DAX index while France's CAC 40 index gained 0.3 percent.