* Caution reigns before Federal Reserve policy decision
* Nikkei ends positive but still sheds 3.5 pct in April
* China's yuan on track for fourth monthly loss
* Disappointing German inflation figures weigh on euro
By Lisa Twaronite
TOKYO, April 30 Asian shares struggled on
Wednesday, while the yen strengthened to session highs after the
Bank of Japan's latest upbeat economic projections suggested no
additional stimulus was on the near-term horizon.
Overall, caution reigned ahead of the outcome of the Federal
Reserve's policy meeting later in the session as well as key
U.S. jobs data on Friday, and against a backdrop of continuing
tension in Ukraine.
Financial spreadbetters expected Britain's FTSE 100
to open 1 to 19 point lower, or down 0.3 percent; Germany's DAX
to open 12 to 16 points lower, or down 0.2 percent; and
France's CAC 40 to open 17 to 18 points lower, or down
MSCI's broadest index of Asia-Pacific shares outside Japan
slipped 0.4 percent, erasing early gains but
still on track for a monthly rise of around 1 percent.
Hong Kong's Hang Seng index slumped 1.3 percent as
investors locked in gains from a late-afternoon surge on Tuesday
that sent it up more than 1 percent in the final hour before the
Japan's Nikkei stock average ended well off session
highs, up 0.1 percent for the day but logging a drop of 3.5
percent in April.
The BOJ board decided unanimously to keep monetary policy
steady as expected, and showed its conviction that inflation
will head steadily towards its 2 percent target as a modest
economic recovery continues.
China's yuan, meanwhile, touched an 18-month low,
hit by corporate dollar demand, and was on track to mark its
fourth straight month of losses.
China's benchmark money rates rose this week in the run-up
to a holiday week that will close markets on Thursday and
Friday, but dealers said they expect rates to fall again when
trading resumes on Monday.
Later on Wednesday, Fed officials are expected to decide
unanimously at the conclusion of their two-day meeting to
continue tapering the central bank's massive bond-buying
stimulus. Investors will focus on what their statement implies
about the monetary policy outlook.
"Fed policy is basically on cruise control while the
Committee waits to see how the economy rebounds from the cold
weather, how the labor market is progressing, and whether
inflation returns to more normal levels," Marshall Gittler, head
of FX strategy at IronFX Global, said in a note to clients.
Just ahead of the Fed meeting, gross domestic product
figures are expected to show the U.S. economy grew at a 1.2
percent annual rate in the first quarter, according to a Reuters
survey of economists, as winter weather, weak exports and a
slower pace of restocking by businesses took their toll.
Market participants continued to track developments in
Ukraine, where hundreds of pro-Moscow separatists stormed
government buildings in a provincial capitals on Tuesday and
fired on police holed up in a regional headquarters.
The dollar shed about 0.3 percent against the yen to 102.37
yen, striking a session low of 102.28 yen soon after the
BOJ revealed its upbeat forecasts, and moving away from a
three-week high of 102.79 yen hit on Tuesday.
Against a basket of currencies, the dollar edged down
The euro remained under pressure after weaker-than-expected
German inflation data on Tuesday raised speculation of more
easing in Europe.
Against the greenback, the euro inched down to $1.3808
after losing 0.3 percent on Tuesday. Against its Japanese
counterpart, the euro dropped 0.3 percent to 141.38 yen
, after falling as low as 141.13 yen in the wake of
the BOJ's projections on Wednesday.
Preliminary German data showed annual inflation was a
softer-than-expected 1.1 percent in April. European policymakers
are concerned about the risk of deflation, with euro zone prices
rising around 0.5 percent, well below the European Central
Bank's medium-term target of just below 2 percent.
The latest price report due later on Wednesday is expected
to show euro zone inflation picking up to a still-low 0.8
percent in April.
In commodities trading, spot gold slipped 0.2 percent
to $1,292.90 an ounce.
U.S. crude slipped 1 percent to $100.32 per barrel,
on expectations that U.S. inventories would hit the highest
level on record.
(Additional reporting by Natalie Thomas in Hong Kong; Editing
by Chris Gallagher)