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Global Markets: Asian stocks step back as investors brace for Fed, eye trade row

Reuters  |  TOKYO 

By Hideyuki Sano

(Reuters) - Asian shares fell on Wednesday as investors braced for a Federal Reserve policy decision later in the day and any clues it might give on future rate hikes that could alter the course of global economic growth and corporate earnings.

Trade frictions between the and were also back on radar ahead of Friday, when has said it will release a list of some $50 billion worth of Chinese goods that will be subject to a 25 percent tariff.

Spread-betters expect all major European indexes including Britain's FTSE, France's Cac and Germany's Dax to open flat to slightly higher.

But MSCI's broadest index of shares outside dropped 0.5 percent, erasing the slim gains made following Tuesday's meeting between U.S. and North Korean leader

"For Asian markets, tariffs will be the biggest concerns in the near term," said Yukino Yamada, at

In a stark reminder of the potential damage from the trade dispute, Hong Kong-listed shares of Chinese fell as much as 41.5 percent, wiping off about $3 billion of its market value, as it resumed trade after agreeing to pay up to $1.4 billion in penalties to the

Its shares fell by their 10 percent limit. The CSI300 index of mainland shares fell 0.7 percent.

Japan's Nikkei eked out gains of 0.5 percent, thanks to a dip in the yen and following a 0.17 percent gain in the U.S. the previous day.

On Wall Street, continued to lead the rally, with the adding 0.57 percent to finish at record high of 7,703.

Trump and Kim promised in a joint statement to work toward the "denuclearization" of the Korean Peninsula, but they offered few specifics.

With the summit out of the way, the market focus is quickly shifting to the Fed's two-day policy meeting ending on Wednesday and a decision on Thursday.

The Fed is widely expected to raise interest rates for the second time this year after a move in March, but the bigger question for investors is the outlook for future monetary tightening amid an ongoing economic expansion.

"With a rate hike almost fully priced in, the focus is on how many times the Fed will raise rates this year and next and how much beyond the levels it considers as neutral to the economy, or what they call the longer-run rates," said Shuji Shirota, of macro group at in

Projections from the Fed's March meeting suggest a benchmark rate of 2.1 percent at end of 2018, based on the median forecast of central bank policymakers, which would mean three rate hikes in total this year.

In the currency market, the dollar was relatively well bid ahead of the Fed's meeting.

The euro traded at $1.1744, off last week's high of $1.1840 touched on June 7 though it was underpinned by expectations that the ECB may drop a hint of winding up its stimulus after its policy meeting this week.

The dollar stood at 110.50 44 yen, near its highest levels in about three weeks.

Some emerging market currencies stayed under pressure on worries higher U.S. rates could prompt fund outflows from emerging markets to the

The Mexican peso hit a 16-month low of 20.724 peso to the dollar on while the South African rand dropped to a six-month low of 13.345 per dollar, extending its decline, triggered by disappointing GDP data last week.

dropped after data from the showed a surprise build of 833,000 barrels in U.S. crude stockpiles. Analysts had expected a decline of 2.7 million barrels.

Expectations that output cuts led by cartel OPEC could be loosened also continued to weigh on prices.

U.S. Intermediate crude futures traded at $66.05 per barrel, down 0.5 percent.

Elsewhere, bitcoin fell to a 2-1/2-month low of $6,461 at Bitstamp exchange on Tuesday on mounting regulatory and security concerns after the weekend hacking of South Korean cryptocurrency exchange Coinrail.

It last traded at $6,570, up 0.2 percent.

(Editing by and Kim Coghill)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 13 2018. 11:37 IST