* MSCI world equity index down 0.4 percent at 340.62

* HSBC profit falls as expected

* Oil falls again, dollar steady before Fed rate meeting

By Natsuko Waki

LONDON, Aug 4 (Reuters) - World stocks slipped on Monday as falling profits at Europe's biggest bank HSBC (HSBA.L: Quote, Profile, Research) sapped investor morale in a week when the Federal Reserve and other major central banks meet to set interest rates.

HSBC's first half profits fell 28 percent, in line with forecasts, as a $14 billion hit on bad debts on U.S. home loans and assets writedowns offset strong Asian growth.

None of the central banks in the United States, euro zone, the UK and Australia is set to change the cost of the borrowing this week as they face slowing growth due to the credit crisis and rising price pressures given high energy prices.

However, investors are keen to hear their views on the fresh market turmoil in July, volatile oil prices and the impact on the broader economy.

"Interest rates are very important this week," said Angus Campbell, head of sales at Capital Spreads.