Fed Outlook: European Shares Freeze As U.S. Dollar Dips

European shares froze on Monday, after their strong start to the fourth quarter while the dollar dipped towards three week lows, with investors skeptical the U.S. Federal Reserve would raise interest rates this year.

Chinese stocks jumped over 3 percent to seven week highs and the yuan currency hit its strongest level since its devaluation in August.

Despite a strong start to the fourth quarter for world stocks, investors remain concerned about the threat of slowing global growth even though central banks have pumped billions of dollars into their economies.

"This global economic slowdown would be less of an issue if it was not being made worse by deflationary pressures and did not occur at a time when confidence in central banks' ability to provide an effective solution is starting to be questionable," said Didier Saint-Georges, managing director and member of the investment committee at Carmignac.

The euro was up 0.2 percent at $1.1380 and the yen was 0.1 percent stronger at 120.11 to the dollar.

"We could get some further weakness in the dollar versus the euro and yen but those two are mainly along for the ride. Most of the weakness will be concentrated on emerging currencies," said Stephen Gallo, a strategist with BMO in London.

While the Fed debates when to raise rates, the European Central Bank is contemplating looser policy. ECB President Mario Draghi said the bank was ready to adjust the size, composition and duration of its trillion euro asset purchase program.