* Fed expected to hike rates, offer policy hints at meeting
* U.S. Treasury yields come off Monday's highs
* Crude oil prices give back some of their surge on output
* Spreadbetters see European bourses opening lower
TOKYO, Dec 13 Asian shares and the dollar were
on tenterhooks on Tuesday as the Federal Reserve prepared to
review rates later in the day, with financial markets focused on
how the Fed steers monetary policy in the wake of Republican
Donald Trump's surprise election win last month.
Crude oil prices pulled back after their surge to 18-month
highs, while a raft of China data sent mixed signals and had
little impact across asset markets.
CMC Markets chief market analyst Michael Hewson expects
European bourses to post opening losses, and said U.S. investors
"adopted a safety first attitude" as the Fed meeting looms.
"Markets in Asia appear to have picked up on the slightly
softer theme from yesterday, and this could well translate into
a softer open in Europe this morning," Hewson said.
CMC expected Germany's DAX and Britain's FTSE
to open lower.
MSCI's broadest index of Asia-Pacific shares outside Japan
was nearly flat in late afternoon trading, while
Japan's Nikkei stock index shrugged off losses as the
yen pulled off its highs and managed to end 0.5 percent higher.
The Fed is widely expected to hike interest rates for the
first time in 2016 at its two-day meeting, with markets pricing
in a nearly 100 percent chance of a quarter percentage point
increase to the Fed's target range of 0.25 to 0.50 percent.
What matters most to investors is the Fed's statement and
economic projections, which will be examined for any signs of
reaction to Donald Trump's surprise victory in the Nov. 8 U.S.
"The big question is what sort of pace can we expect from
the Fed for next year?" said Kaneo Ogino, director at foreign
exchange research firm Global-info Co in Tokyo.
U.S. Treasury yields have recently spiked on expectations
that the Trump administration will enact policies to spark
growth and inflation. In addition to these expectations, surging
crude oil prices have also stoked inflation expectations.
On Monday, the yield on benchmark U.S. 10-year notes
touched 2.528 percent, its highest since Sept. 29,
2014. It stood at 2.473 percent on Tuesday.
Higher yields in turn lifted the dollar, which climbed as
high as 116.120 yen on Monday, its highest since early
February. It was last up 0.2 percent at 115.28 yen, above a
session low of 114.73.
"Many Japanese importers are far behind in dollar-buying, so
they would like to buy on dips," Ogino said.
The euro was nearly flat at $1.0635, while the dollar
index, which tracks the greenback against a basket of six rival
currencies, edged slightly lower to 101.010.
China posted its strongest retail sales growth of the year
in November, data showed on Tuesday, while surging steel
production lifted factory output though private investment began
to slow again, leaving the economy more reliant on state
spending and mounting debt..
Crude oil prices came off their highs after surging on
Monday to their highest since mid-2015 on the back of a weekend
deal by OPEC and non-OPEC producers to curtail output.
U.S. crude futures slipped 0.3 percent to $52.66 a
barrel, while Brent crude, the international benchmark
for oil prices, was down 0.3 percent at $55.55.
Spot gold inched lower to $1,161.01 an ounce, but
remained above 10-month lows hit on Monday as U.S. Treasury
yields came off their highs and the U.S. dollar fell ahead of
the Fed meeting.
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Kim
Coghill & Shri Navaratnam)