* Asian shares hit by China worries * European shares open lower * RBA drops yield target; focus on Fed meeting (Updates prices, adds Wall Street futures, adds comment) LONDON, Nov 2 (Reuters) - Wall Street was set to open lower on Tuesday, after European stocks struggled to gain momentum as investors focused on earnings and a two-day Federal Reserve meeting that ends on Wednesday. Sentiment was mixed in the Asian session, with equities and bonds of Chinese property developers down over worries about contagion from China Evergrande Group’s debt crisis, as a debt exchange from one of the country’s top homebuilders triggered a flurry of credit warnings. At 1218 GMT, the MSCI world equity index, which tracks shares in 50 countries, was flat on the day, having come close to the all-time high it reached in September. European indexes were mixed, with the STOXX 600 down 0.1%, having been knocked off the previous session’s all-time high . France’s CAC 40 reached its highest since 2000 . Matthias Scheiber, global head of portfolio management at Allspring Global Investments, said he expected European and U.S. shares to pick up during the session as more company earnings were released. “There are probably more worries in earnings about inflation and margin pressure, rather than systematic impact from the Chinese property market... We have not seen any negative spillover back into other sectors,” he said. The Reserve Bank of Australia took a major step towards unwinding its pandemic-induced stimulus measures by dropping its target for bond yields and said that a rate move in 2023 was now possible given that inflation had risen more quickly than forecast. But it also pushed back against hawkish market expectations. Short-dated Australian government bond yields fell and the Australian dollar was down 0.8% at $0.7463 at 1221 GMT. The Kiwi was down 0.6% . The U.S. dollar index was steady at 93.927, with Fed policymakers expected to approve plans for scaling back their $120 billion in monthly bond purchases that would phase them out completely by the middle of next year - a first step away from the core policies put in place in early 2021 to battle economic fallout from the coronavirus pandemic. On Monday, Goldman Sachs brought its forecast for the first post-pandemic U.S. interest rate hike forward by a year to July 2022, as the investment bank expects inflation to remain elevated. The U.S. 10-year Treasury yield was lower on the day, at 1.5558%. The 2-year yield fell, in a reversal of moves that saw it reach an almost 20-month high last week. European government bond yields also fell, pausing from a selloff sparked by the European Central Bank last week disappointing expectations of a firm push back against aggressive market pricing for rate hikes. “We don’t read much fundamentally in the recent yield curve flattening across DM, and believe the most likely explanations are technical,” wrote JP Morgan strategists in a note to clients. “...Front-end pricing is starting to look excessive, while in the long end hikes are missing. We look through this technical flattening, and with the pandemic backdrop improving, we continue to expect above-average growth and inflation.” Reporting by Elizabeth Howcroft; Editing by Emelia Sithole-Matarise and John Stonestreet