Asian shares struggled on Tuesday as caution reigned ahead of this week's U.S. Federal Reserve decision on interest rates, while the yen rose after the Bank of Japan took no new policy steps. Financial spread-betters predicted opening gains for European shares, with Britain's FTSE 100 .FTSE see up as much as 0.3 percent, Germany's DAX .GDAXI as much as 0.5 percent higher, and France's CAC 40 .FCHI seen rising as much as 0.6 percent. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS erased early gains and was down 0.7 percent in afternoon trading, taking its cue from slumping Chinese shares. The Shanghai Composite Index .SSEC was down 2.5 percent and the CSI300 index .CSI300 was 2.9 percent lower in thin trading, with many investors sidelined amid concerns over the market's direction after a 40 percent crash over the summer prompted the government to launch a massive rescue package. "With a slim chance of making a profit in this market, money is not following in," said Zhou Lin, analyst at Huatai Securities. Japan's Nikkei stock index .N225 ended up 0.3 percent, though off its morning session highs. The Bank of Japan held policy steady at the end of its two-day meeting as many had expected, and also warned that slowing demand in emerging markets was taking a toll on Japan's exports and output. "There was not a strong expectation for BOJ action, but there was a market reaction after the announcement, showing some were positioning for it," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo. "The BOJ could have decided to wait to see what the FOMC does this week, before taking any steps of its own," she said. Later on Tuesday, investors will listen to BOJ Governor Haruhiko Kuroda's post-meeting speech for future policy clues. Adding to evidence that cooling Asian demand is hurting Japan, a Reuters poll showed Japanese manufacturers' confidence slumped the most in a year in September. The Japanese yen turned higher after the BOJ outcome, with the dollar trading at 119.94 yen JPY=, down about 0.3 percent from late U.S. trade. The euro gave up about 0.2 percent to 135.72 yen EURJPY=, while it was steady against the dollar at $1.1315 EUR=. The dollar index, which tracks the greenback against a basket of six major rivals, was nearly flat at 95.237, well above a three-week low of 94.913 touched overnight. The Australian dollar hit a two-week high against the dollar and the yen after Australia's ruling Liberal Party voted out unpopular Prime Minister Tony Abbott. Malcolm Turnbull, a multi-millionaire former tech entrepreneur, was sworn in as prime minister on Tuesday. On Monday, Wall Street began the week with losses, with U.S. trading volume at its lowest in a month as markets awaited the conclusion of the Fed's two-day meeting on Thursday. Many economists believe that volatile global markets and increasing evidence of slowing momentum in China will prevent the U.S. central bank from raising interest rates for the first time since 2006. A Reuters poll of 72 economists last week showed a slight majority expect an interest rate rise from the current 0-0.25 percent, but a smaller sample saw just a 50-50 chance. In commodities, U.S. crude oil futures clawed back some ground lost in the previous session. U.S. crude CLc1 rose about 0.4 percent to $44.16 a barrel, underpinned by data showing a drop in U.S. supplies. It shed 1.4 percent on Monday. But Brent crude LCOc1 saw its early gains unravel, shedding about 0.2 percent to $46.29, after it dropped 3.7 percent on Monday to its lowest settlement in two weeks. Spot gold XAU= edged down about 0.1 percent to $1,107.60 an ounce.
