* Asian markets edge up, European futures point to mixed open
* Stocks kept in range before Fed’s 2-day policy meeting
* Oil extends fall, growth woes outweigh Middle East concerns
* Asian stock markets: tmsnrt.rs/2zpUAr4
By Shinichi Saoshiro and Noah Sin
TOKYO/HONG KONG, June 18 (Reuters) - Most Asian stock markets rose on Tuesday but gains were capped by investor caution ahead of a U.S. Federal Reserve policy decision, while crude oil prices dipped as global growth worries overshadowed supply concerns.
European stock markets were set to open mixed, with futures for London’s FTSE trading flat but those for Germany’s DAX and the pan-region Euro Stoxx 50 futures down 0.2%.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.6%, while Japan’s Nikkei dipped 0.7%.
The Shanghai Composite Index flitted in and out of positive territory and was last seen up 0.1%. Hong Kong’s Hang Seng rose over 1% and Korea’s KOSPI climbed 0.4%.
Australian shares closed up 0.6 percent at their highest in more than 11 years as an indication of more policy easing by the country’s central bank triggered strong buying.
The Fed, facing fresh demands by U.S. President Donald Trump to cut interest rates, begins a two-day meeting later on Tuesday. The central bank is expected to leave borrowing costs unchanged this time but possibly lay the groundwork for a rate cut later this year.
Hopes for looser U.S. monetary policy have been a tonic for riskier assets, which were buffeted last month by an escalation in the trade conflict between Washington and Beijing. The S&P 500 has gained 5% this month after sliding in May.
“In just a few months, the market has turned from being guided by the Fed to actively guiding the Fed,” wrote interest rate strategists at Bank of America Merrill Lynch.
Markets are almost fully pricing in a 25-basis-point rate cut for July.
“The FOMC (Federal Open Market Committee) meeting is the week’s biggest event so there will be a degree of caution prevailing in the markets,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
“Expectations for a rate cut in July have increased significantly, so the markets could experience disappointment if the Fed does not send strong signals of impending easing.”
César Pérez Ruiz, chief investment officer at Pictet Wealth Management, said in a note on Tuesday “if market expectations for cuts are not met, we could see a jump in market volatility.”
U.S. Treasury yields dipped on Monday after the New York Fed’s “Empire” gauge of business growth in the state showed a fall this month to its weakest in more than 2-1/2-years, fanning rate cut expectations.
The dollar index against a basket of six major currencies eased 0.1% to 97.42 after pulling back from a two-week high on the decline in Treasury yields.
The Australian dollar fell to a fresh five-month low of $0.6830 after minutes from the Reserve Bank of Australia’s June meeting showed policymakers thought it may have to ease again to push down unemployment and revive wages and inflation.
The central bank cut rates to a record low of 1.25% earlier this month to support the slowing economy.
Earlier, the pound extended an overnight slump and brushed $1.2512, its lowest since Jan. 3. Concerns that arch-Brexiteer Boris Johnson will replace Theresa May as prime minister have dogged sterling.
The euro was a shade higher at $1.1230 after spending the previous day confined to a narrow range.
U.S. crude oil futures slipped 0.3% to $51.77 per barrel after retreating 1.1% the previous day. Brent crude was down a similar amount at $60.76, following Monday’s loss of 1.7%.
Oil prices had fallen on Monday as weak Chinese economic data last week led to fears of lower global demand for the commodity.
Concerns over weakening demand overshadowed tensions in the Middle East, which remained high following last week’s attacks on two oil tankers in the Gulf of Oman.
Editing by Sam Holmes and Kim Coghill