* Spreadbetters predict softer starts in Europe
* MSCI Asia erases losses, climbs to 6-1/2 year high
* Dollar trading around 8-month highs vs. euro
* Fed's statement could hint at improving labour market
* U.S. GDP report expected to show economy rebounded
By Lisa Twaronite
TOKYO, July 30 Asian shares touched a
six-and-half-year peak on Wednesday and the dollar was steady,
with investors waiting for second quarter U.S. growth data as
well as a U.S. Federal Reserve meeting that some believe might
yield a more hawkish policy outlook.
The Fed will not be updating its economic forecasts and
Chair Janet Yellen will not hold a news conference following the
two-day policy meeting, leaving investors' focus squarely on a
statement scheduled to be released at 2 p.m. (18:00 GMT).
Ahead of that, financial spreadbetters predicted softer
starts in Europe, with Britain's FTSE 100 seen opening 2
points lower, or down 0.03 percent; Germany's DAX to
open 18 points lower, or down 0.2 percent; and France's CAC 40
to open 9 points lower, or down 0.2 percent.
"Our index opening calls are shaping up for a modestly lower
open, and if sanctions against Russia have caused investor
outflows from Europe then the new sanctions from the EU could
see this headwind continue," Chris Weston, chief market
strategist at IG, said in a note.
Tuesday brought further EU and U.S. sanctions against Russia
over Moscow's support for rebels in eastern Ukraine.
MSCI's broadest index of Asia-Pacific shares outside Japan
shrugged off early losses in the wake of a
decline on Wall Street to rise 0.5 percent to its highest level
since January 2008, while Australian shares climbed to
their highest level since June of that year.
"In the end it's really part of a global rally, it's been
underpinned by the U.S., where economic growth is seen to be
improving albeit slowly, and earnings growth in Australia looks
reasonable at this stage," said Matthew Sherwood, head of
investment market research at Perpetual in Sydney.
Japan's Nikkei stock average ended up 0.2 percent,
as upbeat earnings offset weaker-than-expected industrial
production data which cast doubts over the strength of an
expected third-quarter economic recovery.
Output fell 3.3 percent in June, the fastest rate since the
devastating earthquake and tsunami in March 2011, as companies
put on the brakes due to a pile-up in inventories. But
manufacturers expect output to rise in the coming months.
"Macro funds including overseas pension funds are shifting
to Japanese shares from U.S. shares as valuations of Japanese
shares are cheaper," said Kyoya Okazawa, head of global equities
at BNP Paribas.
On Wall Street overnight, a weak outlook from courier
company United Parcel Service triggered a broad selloff,
pushing the S&P 500 below its 14-day moving average for a
second straight day.
Still, almost 70 percent of the S&P 500 companies that have
reported already have topped earnings expectations, according to
Thomson Reuters data, which is well above the long-term average
of 63 percent. More than half of companies have reported
results, and over 63 percent of them have topped revenue
forecasts, above the long-term average of 61 percent.
FED ON DECK
Later on Wednesday, the Fed is expected to cut its monthly
bond-buying program by another $10 billion.
Also later in the session, the Commerce Department is
expected to report that the economy grew at a 3.2 percent annual
pace in the second quarter, after it shrank 2.9 percent in the
On Friday, the Labor Department's key nonfarm payrolls are
expected to rise by 231,000 in July after an increase of 288,000
in June. The jobless rate is expected to hold steady at 6.1
With U.S. unemployment dropping over the last few months and
inflation firming, some believe the U.S. central bank could
adjust its wording to suggest its willingness to hike interest
rates sooner rather than later as the bank approaches its "full
The yield on the benchmark 10-year U.S. Treasury note
stood at 2.467 percent in late Asian trade, not far
from its U.S. close of 2.462 percent on Tuesday, when it got
support from German, Italian and Spanish government debt yields
all hitting record lows.
Ten-year German government bond yields, the benchmark for
euro zone borrowing costs, sank as low as 1.12 percent
That helped the dollar rise to eight-month highs against the
euro, which extended the drop as low as $1.3403 in Asian
trade and was last steady at $1.3407.
Against the yen, the dollar was steady on the day at 102.12
after it broke above the 102 level on Tuesday for the
first time since early July.
The dollar index, which tracks the U.S. unit against a
basket of six major rivals, was last at 80.225, after
touching a six-month high of 81.245 on Tuesday as the euro
U.S. crude edged up around 0.1 percent on the day to
$101.07 a barrel after touching an intraday low of $100.37 on
Tuesday, its lowest since mid-July.
Spot gold was steady at $1,299 an ounce after
slipping 0.5 percent and breaking below the key $1,300 level in
the previous session.
(Additional reporting by Thuy Ong in Sydney and Ayai Tomisawa
in Tokyo; Editing by Shri Navaratnam, Kim Coghill and Simon