Asian traders tread carefully ahead of bank decisions

[HONG KONG] Asian stocks markets drifted Tuesday and the US dollar was virtually unmoved with investors biding their time as crucial central bank gatherings in the United States and Japan kick off.

The Fed heads into one of its most keenly awaited policy meetings after weeks of speculation that has fanned volatility across global trading floors, with investors split on whether it will lift interest rates.

At the same time opinion is divided on what the Bank of Japan's intentions are, with expectations for fresh stimulus tempered by a lack of concrete promises from Tokyo, despite weak growth and almost non-existent inflation.

The uncertainty leading up to the meeting is keeping traders at bay, Chris Weston, chief market analyst in Melbourne at IG Ltd, said.

"No one is prepared to take on too much risk ahead of the Bank of Japan and the Fed Open Market Committee meetings," he told Bloomberg News.

Tokyo's Nikkei index swung to and fro through the day before ending 0.2 per cent lower.

Hong Kong slipped 0.2 per cent and Shanghai lost 0.1 per cent following healthy gains on Monday. Sydney added 0.2 per cent and Seoul was 0.5 per cent higher, while Singapore shed 0.2 per cent.

In early European trade London fell 0.2 per cent, Frankfurt was flat and Paris fell 0.3 per cent.

Currency markets were also subdued ahead of the bank announcements, which are due Wednesday.

The US dollar edged up to 101.70 yen from 101.88 yen in New York while the euro was at US$1.1185 from US$1.1175.

Sterling bought US$1.3055 compared with US$1.3028.

"It's not unusual for traders to adopt a more cautious approach ahead of these events, particularly when we have two on the same day, both of which have the potential to create huge amounts of volatility in the markets," said Oanda senior market analyst Craig Erlam in a note.

Oil prices turned lower again, digging into Monday's gains as investors grow tetchy about the likelihood of a deal next week between Opec and Russia aimed at addressing a global supply glut and overproduction.

West Texas Intermediate eased 19 US cents to US$43.11 and Brent dipped 16 US cents to US$45.79.

"A big part of the rally was the hope that a deal could be getting closer with agreement at the Algiers meeting potentially leading to another meeting," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

"But without any solid progress or agreement from all the oil producing countries, volatility and uncertain outlook continues."

In company news, Japanese airbag supplier Takata tumbled 11.6 per cent after a report said some potential buyers were considering bankruptcy proceedings if they are successful in its purchase.

The firm has been hit by the global auto industry's biggest-ever safety recall over its exploding bags. Bloomberg News said private equity firms and auto parts makers were preparing offers for the company, and some were considering the drastic bankruptcy action to mitigate the liabilities.

AFP