* Oil steps back as Saudi says has restored supply
* Geopolitical tensions still support oil
* Investors expect Fed to cut rates 0.25% point on Wed
* Asian stock markets: tmsnrt.rs/2zpUAr4
TOKYO, Sept 18 (Reuters) - Oil prices cooled on Wednesday as Saudi Arabia said the kingdom had fully restored its oil supply following attacks on its crude facilities although caution ahead of an expected U.S. interest rate cut kept wider financial markets in tight ranges.
U.S. Treasury yields slipped ahead of an expected interest rate cut by the Federal Reserve at its two-day policy meeting on Wednesday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.05% while Japan’s Nikkei slid 0.03%.
Wall Street shares ticked up a tad on Tuesday with the S&P 500 gaining 0.26%.
Brent crude futures fell 0.64% to $64.14 a barrel while U.S. West Texas Intermediate (WTI) crude lost 0.78% to $58.88 per barrel.
Saudi Energy Minister Prince Abdulaziz bin Salman said the kingdom has recovered supplies by tapping inventories, and lost oil output of 5.7 million barrels per day (bpd) by the end of September
Saudi Arabia’s oil output will be fully restored faster than thought following weekend attacks on production facilities, two sources briefed on developments also said on Tuesday, taking two or three weeks, not months as initially expected.
“I would think a spike in oil prices will likely prove to be short-term given that the global economy isn’t doing too well,” said Akira Takei, bond fund manager at Asset Management One.
Still, heightened geopolitical tensions underpinned oil as well as some safe-haven assets such as U.S. bonds.
A U.S. official told Reuters on Tuesday the United States believes the attacks originated in southwestern Iran, an assessment that could further increase the rivalry between Tehran and Riyadh.
Gold was mostly flat at $1,501.70, while the 10-year U.S. Treasuries yield fell to 1.812%, compared to Friday’s high of 1 1/2-month high of 1.908% ahead of the Fed’s policy announcement on Wednesday.
While a 25-basis point rate cut is seen as near-certain, investors look to the statement and economic projections from Fed policy makers, given signs of deep disagreements among them.
The ongoing U.S.-China trade war has raised policymakers’ concerns about slowing factory output although resilient domestic consumption has given hawks some reasons to worry about cutting rates too hastily.
Possibly further complicating their discussion, short-term U.S. interest rates shot up this week, with overnight repo rates rising to 7%, due largely to seasonal factors such as huge payments for taxes and bond supply.
That prompted the New York Fed to conduct its first repo operation in more than a decade to inject funds to stressed money markets.
The New York Federal Reserve said late Tuesday it will conduct a repurchase agreement operation early Wednesday “in order to help maintain the federal funds rate within the target range of” 2.00% to 2.25%.
In the currency market, the euro stood at $1.1071 after 0.6% gain the previous day on better-than-expected readings in Germany’s ZEW survey on investor confidence.
Sterling traded at $1.2504, up 0.06% so far on the day, having hit two-month high of $1.2528 as investors reversed their bets against the currency on fear of a no-deal Brexit at the end of next month.
The yen stood little changed at 108.10 yen, off 1 1/2-month low of 108.37 touched on Tuesday. (Editing by Sam Holmes)
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