Asian shares pause after rally, watch c.bank meetings

By Chikako Mogi

TOKYO (Reuters) - Asian shares paused from two strong days of gains on Thursday, with investors watching meetings of the central banks of Japan, Britain and the euro zone for signs of policy easing.

The MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent, having recouped all losses incurred on Monday when it tumbled to a nine-week low.

Australian shares edged up 0.2 percent, following another record Wall Street close and data showing Australia's economy grew at a moderate pace last quarter. South Korean shares opened down 0.1 percent.

The blue-chip Dow Jones Industrial Average renewed an all-time high again on Wednesday, boosted by better-than-expected private jobs data for February, raising some expectations the official non-farm payrolls report due on Friday could be relatively solid.

Separate data showed new orders for U.S. factory goods fell in January on weak demand for transportation equipment, but the underlying strength in manufacturing remained intact.

The dollar hit its highest since August 20 of 82.604 against a basket of key currencies on Wednesday.

The Bank of Japan, the Bank of England and the European Central Bank will all announce their policy decisions later in the session, with investors expecting them to maintain or extend soft policy to support fragile economies.

Speculation that the ECB would signal future interest-rate cuts pressured the euro, which stood at $1.2976, just above a three-month low of $1.29655 hit on Wednesday. The pound was down 0.2 percent at $1.4992, after falling to a 2-1/2 year trough of $1.4965 on Wednesday as markets positioned for more stimulus from the BOE.

The dollar eased 0.1 percent against the yen to 93.99, having touched a one-week high above 94 yen on Wednesday, taking it closer to a 33-month peak of 94.77 hit last week. Thursday's BOJ meeting is the last under the current order and investors are solely focused on whether the central bank will immediately launch extra reflationary steps when the new leadership takes over next month.

"Strong U.S. data continue to support the risk rally and the USD," Barclays Capital said in a note, adding that the company remained bearish towards the yen over the medium term, given expectations for more monetary stimulus from the BOJ.

"The BoE's decision on QE (quantitative easing) is likely to be finely balanced; however, the event carries downside risks for the GBP. While our base case remains for ECB policy to be unchanged and little news from the press conference, the risks are skewed to the downside for the EUR," Barclays said.

Japan's Nikkei stock average opened up 0.9 percent to a fresh 4-1/2-year peak.

The pan-European FTSEurofirst 300 index closed down 0.3 percent on Wednesday, falling back after at one stage rising to a 4-1/2 year intraday high, as investors took profits.

U.S. crude was steady around $90.46 a barrel.

(Editing by Eric Meijer)