Tokyo - Asian shares fell while the euro and commodities inched higher on Thursday as investors hope the European Central Bank will take policy action later in the day after the US Federal Reserve stopped short of offering fresh stimulus.
European stocks looked set to open higher, while a 0.2% gain in US stock futures signalled a steady Wall Street start. Financial spreadbetters called the main indexes in London, Paris and Frankfurt to open as much as 0.3% higher.
MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.4%, but Australian shares pushed 0.3% higher after surprisingly strong June retail sales data and a swing in the trade account to a small surplus against a deficit forecast.
Japan's Nikkei stock average rose 0.5%, with traders citing a weaker yen and hopes the ECB will take action to lift the eurozone. The market was also helped by investors buying back shares that had dropped on Wednesday.
"There are some big decisions pending this week. If action is not following, or some of the (promising) commentary is starting to reverse, the market probably will weaken, which is the risk," said Akshay Chopra, portfolio manager of investment manager Karara Capital.
Some investors hope the ECB will resume buying bonds under it Securities Market Programme (SMP) to help drive down borrowing costs for Italy and Spain, which have soared to levels considered unsustainable for their economies.
Germany's Sueddeutsche Zeitung newspaper reported that ECB President Mario Draghi will unveil a two-pronged approach on Thursday, using both the ECB and the future euro rescue fund European Stability Mechanism, to buy bonds from Spain or Italy.
Barclays Capital took a different view.
"The reactivation of SMP is not in our base scenario; hence, we expect the market to be disappointed," Barclays Capital analysts said in a research note. "We believe this likely disappointment will continue to favour our short EURUSD positions for the week," they said.
The euro traded up 0.2% at $1.2250, below a three-week high of $1.2390 reached on Friday but above a two-year low around $1.2042 last week.
Fed and dollar
On Wednesday, US stocks and Treasuries fell while the dollar rallied against the euro and yen after the Fed offered no new monetary stimulus at the end of a two-day policy meeting.
But it kept the door open for further bond buying, known as quantitative easing, to help a US economy that it said had lost momentum. That changed the Fed's tone compared with June, when it said the economy was "expanding moderately."
Investors will now look to the annual central bankers' meeting at Jackson Hole on August 31 for Fed signals, said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
The dollar firmed slightly against the yen to ¥78.45, recovering from a two-month low of ¥77.90 hit on Wednesday.
The dollar was also underpinned by wariness that the Japanese authorities might intervene to stem the yen's appreciation, traders said.
History suggests the yen will stay firm in August against the dollar. It has fallen against the dollar only twice in the month of August since 1999.
"The Fed has retained the option of further monetary easing which will keep the dollar pressured, and puts a slight upward bias towards the yen against the dollar," said Takao Hattori, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
"The dollar's uncertainty helps ease some pressure on the euro even if the euro's outlook remains gloomy. The euro has established its position as a reserve currency for other countries, such as China, and for investors looking to diversify portfolios, which has helped prevent its collapse," he said.
Spot gold recovered, inching up 0.2% to $1,601 an ounce on Thursday.
Brent crude futures steadied near $106 a barrel and US crude edged down 0.1% to $88.86 a barrel.
Copper rose 0.3% to $7 447 a tonne.
"I don't see the market going anywhere for the moment. The market is still waiting for the ECB today and US jobs data tomorrow. But the situation here is still very bearish," Shanghai-based commodities analyst Judy Zhu of Standard Chartered said.
Asian credit markets firmed slightly, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by 2 basis points.
Standard & Poor's on Thursday affirmed Germany's top AAA credit rating, saying its outlook remained stable, contrasting with rival Moody's Investors Service, which last month cut its outlook for Germany, the Netherlands and Luxembourg to negative from stable, citing Europe's debt crisis.