Asian shares tick down, Bernanke comments support

Asian shares mostly tracked Wall Street stocks lower on Wednesday but dovish comments from Federal Reserve Chairman Ben Bernanke helped to limit their losses, lifting commodity prices, and putting pressure on the dollar.

Chinese policymakers set the yuan's midpoint at the highest level since the 2005 revaluation, a day after China's central bank said it would gradually withdraw from regular intervention in the foreign exchange market.

European shares are expected to fall, with Britain's FTSE seen dropping as much as 0.4%, and Germany's DAX 0.1%.

A slight pullback in Wall Street on Tuesday dampened shares across Asia, pushing MSCI's broadest index of Asia-Pacific shares outside Japan down 0.6%.

Still, the index was up 1.0% from the start of week, outperforming the 0.6% fall in the Standard & Poor's 500, supported by optimism on Beijing's ambitious reform plans.

Hong Kong shares bucked the trend to eke out small gains, extending its rally so far this week to 3.0%, though they stopped short of testing their January peak.

"I think Hong Kong shares are best-placed at the moment, as they are likely to benefit from easy US monetary policy as well as hopes on reforms in China," said Hirokazu Yuihama, senior strategist at Daiwa Securities.

Fed Chairman Bernanke reiterated the Fed would maintain its ultra-easy policy for as long as needed and would taper bond-buying only when it was sure that labour market improvements would continue.

"Some people had been thinking that the Fed could begin tapering in December. But Bernanke's comments sound like there will be no tapering in December," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank.

Bernanke's comments boosted the euro to a three-week high of $1.3584. The common currency last traded at $1.3550, up slightly from late US levels.

Commodity prices also bounced back from lows following Bernanke's comments.

US crude futures gained 0.3%, after hitting 5 1/2-month low the previous day on hopes that talks between world powers and Iran could lead to an easing of sanctions against the oil producer.

Copper rose 0.3% while silver rose 0.6%, both bouncing back from three-months low set on Tuesday.

Investor focus is now moving to the minutes of the Fed's October policy meeting as well as a barrage of US data, including retail sales and inflation, due later in the day.

PBOC SEEN WIDENING YUAN TRADING BAND

In another closely-watched move, the Chinese central bank set the yuan's mid-point for Wednesday trading at 6.1305 per dollar, the highest level since the landmark revaluation in 2005.

Zhou Xiaochuan, head of the People's Bank of China, said in a book about the reforms published on Tuesday that China will gradually expand the yuan's foreign exchange trading band to make the currency more flexible and market-driven.

While that does not necessarily mean that China will move the trading band overnight, some analysts think the yuan could gain in the near-term on speculation of a wider trading band.

The yuan was little changed in onshore trading, changing hands at 6.0923 per dollar compared with 6.0927 at the local close on Tuesday.

The US dollar was also unsettled by the news on China as Beijing is less likely to buy US dollars to keep its currency in check.