* 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 0.4 percent.
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 close.
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 to 79.802.
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)