Asia stocks, dollar steady as investors await Fed clues

Asian stocks steadied on Wednesday and the dollar held firm as investors awaited the Federal Reserve's policy decision later in the day for more clues on its tightening plans. 

The wait-and-see mood was expected to prevail in the European session, with spreadbetters forecasting Britain's FTSE .FTSE and France's CAC .FCHI to open effectively flat while predicting Germany's DAX .GDAXI to inch up 0.05 percent. 

The Fed will conclude its two-day meeting later on Wednesday, and is widely expected to keep interest rates unchanged. 

With a rate hike not in the picture this time, the focus will be on the Fed's statement, with markets looking for signs of when the central bank will begin paring its massive bond holdings and next raise rates. Its statement is expected at 1800 GMT.

Federal funds futures implied traders saw the chance of a Fed rate increase in September at about 8 percent and a December hike possibility at 48 percent. 

A more assertive policy message by the Fed, on the other hand, would likely lift U.S. yields and boost the dollar. 

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was little changed, but drew mild support after the S&P 500 .SPX climbed to an all-time high overnight on well-received results from McDonald's (MCD.N) and Caterpillar (CAT.N) in addition to bank share gains. 

Australian stocks gained 1 percent with a smaller-than-expected rise in local inflation supporting views that interest rates will remain at record lows for some time to come. The Australian dollar slipped 0.5 percent to $0.7896 AUD=D4. 

Japan's Nikkei .N225 added 0.5 percent after the dollar rallied against the yen JPY= overnight to pull away from seven-week lows. 

Shanghai .SSEC shed 0.4 percent on lingering fears of further regulatory tightening, while South Korea's KOSPI .KS11 lost momentum after touching a record high the previous day and slipped 0.3 percent.