Asian shares edge up on Wall Street lead, pre-Fed nerves limit gains

Asian stocks edged up early on Wednesday following a relatively upbeat session overnight for U.S. and European stocks, with caution ahead of the Federal Reserve's policy decision capping gains.

The safe-haven yen sat atop large gains as hopes for a large fiscal stimulus package out of Japan faded. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1%. Japan's Nikkei climbed 1.1% and Australian shares added 0.3%. South Korea's Kospi stood flat.

On Tuesday, US equity markets closed mixed while stocks in Europe traded slightly higher as gains in major healthcare and consumer goods stocks propped up European equities to offset persistent concerns over the region's banking system.

All eyes were on the Fed, which concludes its two-day policy meeting later on Wednesday. The US central bank is widely expected to stand pat on monetary policy and the markets will sift through its statements - a post-meeting press conference will not be held - for any hints of a future interest rate hike.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, expects a relatively upbeat statement from the Fed.

"The nervous Nellies have likely been reassured by both the improvement in the labour market, renewed consumption and the general resilience of the capital markets in light of the UK's referendum," Chandler wrote.

"Moreover, the markets seem unperturbed by the weakness of the Chinese yuan and China's equity market losses. Last August, and as recently as January, China's markets were a cause of much consternation among investors."

In currencies, the dollar was up 0.3% at 104.91 after tanking more than 1% overnight. The yen soared against the dollar on Tuesday as disappointment spread in the currency market on Japan's upcoming fiscal stimulus package.

There was speculation last week that Tokyo's fiscal spending would be quite large, but the latest media reports pointed towards a much smaller package.

Still, hopes that the Bank of Japan would ease monetary policy in one form or another after a two-day meeting ending on Friday capped the yen for the time being.

The euro stood steady at $1.0987 after edging up 0.3% overnight thanks to the greenback's broad retreat versus the yen. The pound edged up 0.2 percent to $1.3151 after touching a two-week low of $1.3057 overnight following dovish statements from Bank of England policymaker Martin Weale.

The Australian dollar rose 0.3% to $0.7522 with the local market awaiting the domestic consumer price data due later in the session, seen shaping near-term monetary policy expectations.

Crude oil extended losses after suffering big hits overnight on renewed concerns about oversupply. US crude was down 0.6% at $42.65 a barrel. The contracts had touched $42.36 on Tuesday, their lowest in three months.

Trade group American Petroleum Institute (API) said Tuesday that U.S. crude stockpiles fell by 827,000 barrels last week, much less than analysts' expectations for a drawdown of 2.3 million barrels.