* European shares seen opening slightly lower
* Dollar index edges up, stays above recent nine-month low
* Australian shares fall from 5-year high; Stevens' comments
* Lacklustre U.S. data reinforces view Fed will hold steady
* Brent crude slips after surging on Libya supply concerns
By Lisa Twaronite
TOKYO, Oct 29 Asian shares withered and the
dollar lurked just above its recent lows on Tuesday, as
investors awaited confirmation the U.S. Federal Reserve will
stay the course with stimulus at its policy meeting this week.
European markets were tipped to open not far from their
previous closes, with financial spreadbetters predicting
Britain's FTSE 100 to open down about 0.3 percent;
Germany's DAX, which touched a fresh record high of
9,017.95 points on Monday, to open down about 0.1 percent; and
France's CAC 40 to open steady to slightly higher.
Australian shares ended down 0.5 percent after
surging 1 percent on Monday to a new five-year high, while
MSCI's broadest index of Asia-Pacific shares outside Japan
was down about 0.3 percent in late trade.
Japan's Nikkei stock average gave up 0.5 percent,
but ended off its session lows.
Economists and market participants expect no change to the
Fed's $85 billion monthly asset purchase programme at its
two-day meeting ending on Wednesday. Most predict the central
bank to delay any stimulus tapering until at least March.
Monday's U.S. economic data offered nothing to alter this
view. U.S. manufacturing output barely rose in September and
contracts to buy previously owned homes fell the most in nearly
3-1/2 years, showing economic activity was on a weak footing
even before the 16-day partial shutdown of the U.S. government,
which is expected to trim fourth quarter growth.
"The soft industrial production report, plus the
larger-than-expected decline in pending home sales, is unlikely
to give comfort to FOMC policymakers who await stronger economic
data before initiating tapering," strategists at Barclays wrote
in a client note.
U.S. S&P E-mini futures were down about 0.1 percent,
after the S&P 500 Index closed at a record high in New
York on Monday.
One factor that had weighed on investors' minds in recent
sessions faded on Tuesday, as China's money rates stabilised
after the central bank resumed open market operations for the
first time since Oct. 15. This eased worries that the
authorities were preparing to dramatically tighten monetary
"With Tuesday's injection, people are even more confident
that the government will not change its neutral monetary policy
for now, although the PBOC will stick to its pro-tight stance in
managing the liquidity," said a senior trader at a Chinese
state-owned bank in Beijing.
India's central bank took another tightening step on
Tuesday, raising its policy interest rate for the second time in
as many months as it warned that inflation is likely to remain
elevated for the rest of the fiscal year.
DOLLAR INDEX EDGES AWAY FROM 9-MONTH LOW
The dollar index, which tracks the greenback against a
basket of six major currencies, added about 0.1 percent to
79.344, holding above a nine-month low of 78.998 hit on
The dollar shed about 0.1 percent against its Japanese
counterpart to 97.54 yen, but managed to stay above a
more than two-week low of 96.92 yen hit on Friday, according to
The Bank of Japan also meets this week, and is expected to
maintain its monetary policy on Thursday as it aims for its
target of 2 percent inflation in two years.
The International Monetary Fund's top official for Asia said
on Tuesday that an increase in Japanese foreign direct
investment and bank lending to Asia has helped counteract
capital outflows triggered by expectations that the Fed would
taper its asset-buying programme.
The euro was nearly flat on the day at $1.3787, not
far from Friday's high of $1.3832, its highest level since
The Australian dollar tumbled after Australian
central bank governor Glenn Stevens said it was likely the
Aussie would fall materially in the future, given the country's
declining terms of trade. That shift would be welcomed by
The Aussie last stood at $0.9508, down 0.6 percent and well
off a five-month high of $0.9758 last Wednesday.
In commodities trading, spot gold was slightly higher
on the day at $1,352.96 an ounce after rising to a five-week
high of $1,356.50 on Monday.
Copper fell about 0.4 percent to $7,165 in the wake
of the downbeat U.S. economic data.
U.S. crude futures edged down about 0.2 percent
towards $98 a barrel but held within sight of a one-week high as
a sharp drop in Libyan oil exports rekindled worries over
supply. Brent crude slipped 0.4 percent to $109.13 after surging
$2.68 in the previous session.
Libya's crude oil exports have dropped to less than 10
percent of capacity as protests have halted operations at
western ports and fields.