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Asian markets retreat ahead of US, Japan bank meetings

Hong Kong - Asian shares edged down on Tuesday as dealers wait for the Federal Reserve and Bank of Japan's next policy meetings later in the week, but oil prices rallied more than one percent after the previous day's sharp losses.

Having piled up healthy gains last week, analysts said traders were moving cautiously as they hope for some forward guidance on the Fed's policy plans, while the corporate earnings season also kicks off.

"Overall we're in wait-and-see mode," Toshihiko Matsuno, chief strategist at SMBC Friend Securities in Tokyo, told Bloomberg News.

"It's easier for investors to lighten their positions so damage will be limited in case something unexpected happens in US and Japanese monetary policy."

After the turmoil across world markets at the start of the year, the Fed lowered its expectations for rate hikes this year saying it would closely watch overseas developments before moving.

Traders have predicted the next rise will be towards the end of the year but every utterance from the bank will be pored over for clues about its thinking.

Asian markets were mostly down in edgy trade.

Japan's Nikkei index ended the morning 1.3% lower, with the yen holding Monday's gains against the dollar despite speculation that the country's central bank will ramp up its stimulus after a two-day policy meeting on Thursday.

The dollar was back below ¥110; having pushed towards ¥112 at the end of last week on speculation the central bank will unveil fresh measures.

The BoJ has been tipped to further ease monetary policy after this month's double earthquake in the south of Japan that led to the closure of factories at a time when the economy is already stuttering.

Wednesday sees the start of the earnings season, with Sony and Nintendo among a slate of big-name firms set this week to report results for the fiscal year through March.

Among other markets Hong Kong was down 0.5% and Seoul shed 0.4%. Shanghai eased 0.2%.

On crude markets the two main contracts - West Texas Intermediate and Brent - were up 1.1% each after tumbling on Monday on a report that Saudi Arabia was close to finishing a key oilfield expansion that would help it boost output.

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