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Shares of the world's largest hamburger chain fell about 1.7 percent in premarket trading on Monday as the company also reported a fourth-quarter profit in line with expectations.

McDonald's said global sales at restaurants open at least 13 months rose 3.7 percent overall in December. They gained 2.6 percent in the United States, slid 0.5 percent in Europe and rose 8.9 percent for Asia-Pacific, Middle East and Africa.

Wall Street had expected December same-restaurant sales to be up 3.9 percent in the United States, up 3.4 percent in Europe and gain 5.7 percent in APMEA, according to Janney analyst Mark Kalinowski.

For January, the company expects global same-restaurant sales to increase in a range of 4 percent to 5 percent.

Net income in the fourth quarter rose to $1.24 billion, or $1.16 a share, compared with $1.22 billion, or $1.11 a share, in the year-earlier quarter. The profit matched what analysts polled Thomson Reuters I/B/E/S had expected.

McDonald's shares dropped to $73.73 in premarket trading from Friday's closing price of $75.01 on the New York Stock Exchange.

(Reporting by Ben Klayman; Editing by Derek Caney and Maureen Bavdek)

Concerns about rising inflation gave investors an excuse to book profits in some Asian markets after strong rallies in 2010, but rather than exiting the region funds were being reallocated to countries seen as having a better grip on price pressures.

Profit-taking also hit the euro, which backed away from a nine-week high, although easing concerns about Europe's sovereign debt crisis gave some support to the single currency.

The MSCI index of Asia Pacific stocks outside of Japan .MIAJ00000PUS was flat on the day after being up nearly 0.3 percent in early trade.

It posted its worst weekly performance in nearly two months last week and is down by 1 percent for the month. In contrast, the Dow Jones industrial average .DJI is up 2.5 percent in the same period.

"The Dow Jones gain on Friday and higher Asian stocks this morning may provide positive support," said Parin Kitchaotornpitak, a senior analyst at broker Far East Securities in Bangkok. "But we still see some pressure from selling by foreign investors."

Japan's Nikkei average .N225 rose 0.5 percent, with resource shares popular and recently beaten-down exporters bought amid expectations of robust earnings reports from Japanese firms this week. .T

The euro stayed above the $1.36 line, having burst through the key resistance level last Friday, helped by hawkish comments from the European Central Bank chief Jean-Claude Trichet which gave markets an excuse to cut short euro positions.

That is in sharp contrast to the Fed, which is likely to leave policy unchanged at a review on Wednesday and note a slight improvement in the economy's outlook.

The euro has rallied some 6 percent in the past two weeks on demand from Asian central banks, traders said.

INFLATION, WHAT INFLATION?

While sellers targeted stocks in India, China and Indonesia last week, on worries that authorities were being too slow to tighten policy, Citigroup strategists said inflation was running at a lower level than seen during previous cycles.

Markus Rosgen, head of Asia ex-Japan strategy at Citigroup, said inflation in Asia typically tends to pick up during this stage of the economic cycle as economies grow into their excess capacity, only to eventually subside.

Rosgen recommends buying North Asia and cyclical stocks and avoiding South Asia, consumer and utility sectors.

Moreover, the broad MSCI Asia Pacific ex-Japan 12-month forward price/earnings ratio is still below the long-term average, indicating valuations still remain attractive, according to Thomson Reuters data, while inflows into emerging markets have persisted.

The unemployment rate is finally edging lower and figures due on Friday are expected to show economic growth strengthened over the final three months of 2010. But the Fed may provide only a slightly more upbeat economic assessment at its next policy-setting meeting, which wraps up on Wednesday.

The central bank's word choices are always parsed and scrutinized. This week's statement will be particularly tricky because the Fed will need to acknowledge the improving economic data without sending a false signal that its $600 billion bond-buying program could end early.

But if Bernanke and company are too sparing in describing the recovery's progress, that could be interpreted as a lack of faith that this latest burst of economic vigor will last.

At its last meeting, in December, the central bank said the economic recovery was continuing but at too sluggish a pace to bring down unemployment, and the high jobless rate was weighing on consumer spending.

The jobless rate, however, dipped to 9.4 percent in December from 9.8 percent the previous month, still well above normal but down considerably from a cycle peak of 10.1 percent hit in October 2009.

As for consumer spending, it appears to have grown at a nearly 4 percent annual rate in the latest quarter.

"A key question is whether the Fed modifies its description of spending or looks past the data and maintains its downbeat view," said Barclays Capital economist Dean Maki.

"The latter would suggest that its views will be difficult to change," he said.

Maki said the central bank may find a middle ground by upgrading its description of spending growth, perhaps to "solid" from "moderate."

Likewise, the Fed could read the December dip in the unemployment rate as little more than monthly volatility or a promising sign.

Maki said officials may want to preserve some flexibility for now, perhaps by saying the rate of recovery was not robust enough to bring down unemployment "in a sustained way."

The Bank of Japan also holds a policy-setting meeting this week. Like the Fed, it is widely expected to keep interest rates unchanged near zero. Unlike the Fed, it is grappling with negative readings on key inflation gauges.

Economists polled by Reuters think Japan's consumer price index will show a 0.1 percent decline year-on-year. Excluding food and energy costs, core inflation is expected to be down 0.5 percent. The figures are due on Thursday.

UNEMPLOYMENT AND INFLATION?