Asian stocks wobble on concerns over possible Federal Reserve rate hike

TOKYO - Asian shares meandered Tuesday as jittery investors took cues from gains on Wall Street but volatility remained high ahead of Federal Reserve and Bank of Japan policy meetings.

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KEEPING SCORE: Japan's Nikkei 225 stock index fell 1.1 per cent to 18,670.76 as the yen rose against the U.S. dollar. Australia's S&P/ASX 200 fell 0.2 per cent to 4,919.30, but most other major markets gained. Hong Kong's Hang Seng rose 0.5 per cent to 21,406.08 and the Shanghai Composite added 0.1 per cent to 3,523.66. South Korea's Kospi was up 0.2 per cent at 1,930.96. Markets in New Zealand, Taiwan rose and shares in Southeast Asia were mostly lower.

THE FED: The Federal Reserve begins its last meeting of the year on Tuesday, and is expected to raise interest rates for the first time in almost a decade on Wednesday. The Fed's key short-term interest rate has been close to zero since Dec. 16, 2008. A rate hike would signal confidence in the U.S. economy, but some investors worry it may slow growth.

JAPAN STIMULUS: Mixed economic data for Japan are keeping alive, though just barely, hopes for more stimulus from the Bank of Japan to help spur the recovery. But most economists do not expect such a move at the policy meeting that wraps up on Friday.

THE QUOTE: "A combination of taut nerves and thin markets may mean an unseasonal increase in market volatility over the coming weeks," Michael McCarthy of CMC Markets said in a commentary, noting that a rate hike is still uncertain. "Although markets are prepared for a rate rise, the disparity in forecasts may mean there is still a strong reaction in trading," he said.

WALL STREET: After an indecisive day that followed a dismal week, stocks turned around in the last minutes of trading Monday and managed to end with modest gains. The Dow Jones industrial average picked up 103.29 points, or 0.6 per cent, to 17,358.50. The S&P 500 index gained 9.57 points, or 0.5 per cent, to 2,021.94. The Nasdaq composite index added 18.76 points, or 0.4 per cent, to 4,952.23.

ENERGY: The price of U.S. crude oil fell below $35 a barrel on Monday for the first time since early 2009 but then rebounded to gain about 2 per cent, or 69 cents, to $36.31 a barrel. In Asia on Tuesday, U.S. crude lost 5 cents to $36.26 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, a benchmark for international oils, fell 18 cents to $37.98.

CURRENCIES: The dollar edged lower, to 120.91 yen from 121.09 yen in the previous session. The euro rose to $1.1020 from $1.0994.


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