By Wayne Cole
SYDNEY (Reuters) - Asian share markets faded from seven-year peaks on Wednesday while investors exited crowded positions in the U.S. dollar as the Federal Reserve wraps up a two-day policy meeting.
The broad retreat in the U.S. currency came as a string of soft data seemed to push back the day when the Fed might start lifting rates, and ignored a rise in Treasury yields.
Trading was thinner on Wednesday with Japanese markets on holiday and little in the way of major data out in Asian time.
That helped the dollar index to steady at 96.098 after touching the lowest since March 5. The euro stood at $1.0972 having stopped short of resistance at $1.1000.
The dollar fared better on the yen at 118.84 as Japan's central bank is expected to reaffirm its massive stimulus campaign at a policy meeting on Thursday.
Talk of more aggressive policy easing in China has also put a bid under many regional stock markets, and helped Shanghai recoup early losses to add 0.2 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan retreated 0.9 percent having touched their highest since early 2008 at one point.
Australian stocks slid 1.6 percent after repeatedly shying away from a major psychological barrier at 6,000.
South Korean electronics giant Samsung <005930.KS> rose 1.5 percent after reporting its fattest profit in three quarters.
Financial spreadbetters expected Britain's FTSE 100 to open up as much as 0.3 percent, with Germany's DAX adding 0.1 percent and France's CAC 40 0.3 percent.
On Wall Street, the Dow had ended Tuesday with gains of 0.4 percent, while the S&P 500 <.SPX> rose 0.28 percent and the Nasdaq dipped 0.1 percent.
Aiding the Dow was a 1.9 percent gain in IBM
Apple
The Fed's latest policy statement will come just hours after data are expected to show the U.S. economy grew at a pedestrian 1 percent annualised pace in the first quarter, partly due to bad weather and a port strike.
The Fed has so far played down the softness in the hope of a rebound in the second quarter, and there have been hints of a much-needed upturn in wages and inflation.
"Investors are approaching FOMC with the view it will bore as much as possible. The risk is that what is neutral to the Fed may be surprisingly upbeat to the market," said analysts at Citi.
"We would not see this as a big near-term boost to the dollar and bond yields, but more a reminder that the Fed remains hopeful that data will improve sufficiently for a lift-off in September."
Yields on 10-year U.S. Treasury bonds were near one-month highs at 2.010 percent on Wednesday, having drifted up from 1.90 percent at the start of the week.
In oil markets, traders were unsure what to make of a surprise move by Saudi King Salman bin Abdulaziz to sack his younger half brother as crown prince and appoint his nephew as the new heir apparent.
Internal reshuffles in Saudi Arabia often move oil prices because stability in the world's biggest oil exporting country is key to global supplies.
Brent crude was quoted 16 cents lower at $64.48 a barrel, while U.S. crude
(Editing by Shri Navaratnam, Jacqueline Wong and Eric Meijer)
