Asian shares flat, yen hits two-week high ahead of BOJ

By Nichola Saminather and Hideyuki Sano

SINGAPORE/TOKYO (Reuters) - Asian shares touched a one-year peak on Friday, while the yen hit a two-week high in nervous trade as investors waited to see if the Bank of Japan will come up with stimulus that would meet markets' expectations.

MSCI's broadest index of Asia-Pacific shares outside Japan hit the highest level since Aug. 11 before pulling back to trade down 0.2 percent.

It is set for a 1.2 percent gain for the week, and 5.7 percent for the month.

Japan's Nikkei slipped 0.4 percent. It looked set for a 1.3 percent weekly drop, but a 5.4 percent monthly gain.

The yen rose to as high as 103.30 to the dollar from 105.30 in late U.S. trade on Thursday, which market players largely attributed to the result of "fat finger" orders exacerbated by thin trading conditions as there was no apparent news to justify such a big move.

The BOJ is widely expected to expand its stimulus further by increasing its already massive asset purchases and possibly cutting interest rates deeper into negative territory.

But many investors said there is a big chance of disappointment because markets have long expected more stimulus, making it difficult for BOJ Governor Haruhiko Kuroda to spring a surprise.

The yen was last up 1.1 percent at 104.11 per dollar, with all eyes on the BOJ's policy decision, which is usually announced some time between 0230 GMT to 0500 GMT.

The Japanese government, which is crafting a fiscal stimulus package, has been lobbying hard for the BOJ to ease policy further and has prepared a statement it will publish in case the central bank eases.

"As the government is preparing a supplementary budget, the BOJ is perhaps feeling that they could maximize the impact of what little easing it can do by synchronising their moves," said Daisuke Nomoto, senior portfolio manager at Columbia Threadneedle Investments in Boston.

Wall Street shares remained near all-time highs, with tech heavyweights Alphabet and Amazon rising after the bell as their earnings beat expectations.

The dollar index slipped 0.3 percent to 96.452, putting it on track for a slide of 0.5 percent for the week, but a gain of 0.3 percent for the month.

European shares fell on Thursday, however, as markets awaited the release of the stress test results on European banks on Friday night.

The euro stood little changed at $1.1085. It is up almost 1 percent this week, but poised for a 0.2 percent loss in July.

Elsewhere in markets, oil prices fell to three-month lows, with U.S. benchmark now down more than 20 percent from this year's peak on growing worries that the world might be pumping more crude than needed.

U.S. crude futures fell to as low as $40.95 per barrel and were last down 0.2 percent at $41.06. It's set for a drop of 6.8 percent for the week and 15 percent in July.

International benchmark Brent crude futures dropped 0.1 percent to $42.64. It is down 6.7 percent this week and 14 percent this month.

(Editing by Kim Coghill)