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Asia stocks hesitate as Fed decision looms

Wednesday - 9/18/2013, 1:02am  ET

FILE - In this Monday, Sept. 16, 2013, file photo, specialist Frank Masiello works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, File)

PAMELA SAMPSON
AP Business Writer

BANGKOK (AP) -- Asian stock markets struggled to find their footing Wednesday as traders hesitated to make bold moves before the Federal Reserve winds up a crucial policy meeting later in the day.

The Fed is widely expected to announce some sort of reduction in its massive bond-buying program, launched after the 2008 financial crisis to boost the flailing U.S. economy.

Stock markets are hoping for a small reduction because the bond-buying has kept interest rates super-low, making it cheaper to borrow money. The low bond yields and flood of money led investors to plow into stock markets, fueling rallies across the globe.

But U.S. central bank officials have increasingly voiced a desire to scale back the program in light of data showing a slow but steady improvement in the U.S. economy. Fed chairman Ben Bernanke put markets on notice in May that "tapering" was likely this year. Bets are for the Fed to announce a $10 billion reduction in monthly bond purchases.

Paul Dales of Capital Economics said in an email commentary that he also expects the Fed to emphasize that "interest rates will remain low for a long time, perhaps via the publication of its interest rate forecasts for 2016 for the first time."

Japan's Nikkei 225 index rose 1.8 percent to 14,570.76. Hong Kong's Hang Seng fell 0.2 percent to 23,140.55. Australia's S&P/ASX 200 lost 0.3 percent to 5,236.90. South Korean markets were closed for a public holiday. Benchmarks in New Zealand and Singapore rose while the Philippines and Indonesia fell.

Benchmark oil for October delivery was up 22 cents to $105.64 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.17 to close at $105.42 on the Nymex on Tuesday.

In currencies, the euro fell to $1.3347 from $1.3357 late Tuesday. The dollar rose to 99.26 yen from 99.15 yen.

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