Asia Markets mostly down as investors eye Fed

SEOUL, South Korea (AP) -- Asian markets were mostly lower Wednesday as investors waited for an update on the U.S. economy from the U.S. Federal Reserve.

The results of a two-day Fed policy meeting will likely ripple through stock markets once investors learn whether there will be changes in the U.S. central bank's strategy for shoring up the world's No. 1 economy. The meeting is set to wrap up on Wednesday in Washington.

Stocks in Hong Kong, mainland China and Seoul went south. Hong Kong's Hang Seng index was down 1.2 percent to 20,966.89, while South Korea's KOSPI index shed 0.9 percent to 1,884.03. Shares fell in New Zealand, the Philippines, Singapore and Indonesia.

"Foreign investors are selling more shares than they are buying but trading volume remains thin," said Kim Hyoung-ryoul, a market analyst at Kyobo Securities Co. in Seoul. "As the result of the Fed meeting comes out early Thursday morning in South Korea, the market is reflecting a wait-and-see attitude."

Worries that the Fed may scale back its bond purchase program made shares in emerging markets sway in recent days. Super-easy monetary policies by central banks in advanced economies like the U.S. prompted money to flow into Asian markets, which could see a reversal when the global central banks unwind their aggressive stimulus programs.

Asia's heavyweight Japan was a rare bright spot. The Nikkei 225 stock average added 0.8 percent to 13,113.59 while Australia's S&P/ASX 200 index was up 0.7 percent to 4,848.10. Benchmarks in Taiwan and Thailand also rose.

For weeks now, markets have been gripped with uncertainty over whether the Fed will start reducing its financial assets purchases. The Fed's super-easy monetary policy has helped drive sentiment in the markets. Any reduction — so-called tapering — could spook investors who have become accustomed to seeing much of the money generated by the policy ending up in financial markets.

The uncertainty was caused by comments made by Fed chairman Ben Bernanke in May and investors will be hoping for a clearer picture at the end of the meeting Wednesday. Though no change is expected, investors will be looking for a clearer line in the accompanying Fed statement and in Bernanke's post-meeting press conference.

"At best the markets will be looking for reassurance from Bernanke that the Fed intends to keep rates low for some time to come and that it will be looking to manage any form of reduction of stimulus measures in a very gradual and orderly manner in a fashion that takes into account the state of the US economy," said Michael Hewson, senior market analyst at CMC Markets.

On Tuesday, the FTSE 100 index of leading British shares ended 0.7 percent higher at 6,374, while Germany's DAX rose 0.2 percent to 8,229. The CAC-40 in France was barely changed, down 0.08 percent at 3,860.

On Wall Street, the Dow Jones industrial average rose 0.9 percent, to close at 15,318.23 on Tuesday. The Standard & Poor's 500 index rose 0.8 percent to 1,651.81. The Nasdaq composite index rose 0.9 percent to 3,482.18.

Tuesday's batch of U.S. data did little to add to the debate over the Fed's stance. The rise in inflation to 1.4 percent in the year to May from 1.1 percent in April was in line with predictions and largely due to base effects. Meanwhile, the 6.8 percent rise in housing starts during the month was a tad lower than anticipated.

Benchmark oil for July delivery fell 16 cents to $98.27 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 67 cents to close at $98.44 a barrel on the Nymex on Tuesday.

In currencies, the euro fell to $1.3388 from $1.3405 late Tuesday in New York. The dollar fell slightly to 95.21 yen from 95.27 yen.