By Lisa Twaronite
TOKYO (Reuters) - Asian shares slipped on Tuesday, taking their cues from a modestly lower day on Wall Street, while crude oil prices stabilised after their overnight tumble and the U.S. dollar edged higher.
The Reserve Bank of Australia's policy board will decide on Tuesday whether rates should be left at 1.75 percent or trimmed a quarter point to a new record low, with most analysts predicting the need to combat low inflation and a rising currency will win the argument for more stimulus. Not all commentators, however, are convinced the RBA will announce a rate cut when its decision is made public at 0430 GMT.
"The majority of economists surveyed expect the RBA to cut interest rates by 25 basis points but we feel that a rate cut is not a done deal," wrote Kathy Lien, managing director of FX strategy for BK Asset Management.
She noted that since the last RBA meeting in July, manufacturing activity and consumer prices had increased, full time job growth has rebounded, and business confidence had improved.
"Granted consumer confidence is down and the unemployment rate ticked up, (but) we're not sure if this is enough for the RBA to pull the trigger on easing in August," Lien said.
Australian shares were 0.4 percent lower ahead of the RBA announcement.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 percent, after the S&P 500 had hit an intraday record high overnight but was unable to hold onto any gains.
Trading in Hong Kong stocks was delayed as the city braced for Typhoon Nida, shutting down most of the financial hub.
Japan's Nikkei stock index slipped 0.9 percent.
"The Nikkei had not been able to make further advances after rising significantly, and we are also starting to see a retracement of some of those gains," Chihiro Ohta, general manager of investment research and investor services at SMBC Nikko Securities.
The Nikkei had gained more than 6 percent in July, when monetary and fiscal stimulus hopes propelled it to 1-1/2-month highs.
Prime Minister Shinzo Abe's cabinet is likely to approve a 28 trillion yen ($273 billion) stimulus package on Tuesday, though direct fiscal spending will total only about 7 trillion yen, according to two people briefed on the matter.
Japanese government bonds skidded despite weaker stocks, accelerating a slide begun in the wake of last Friday's Bank of Japan easing steps that disappointed many investors. The benchmark 10-year JGB yield was up 8.5 basis points at minus 0.055 percent, touching its highest levels since early April.
"The correction in JGBs is quite severe," said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank in Tokyo. "Investors are still cutting their long positions built up ahead of the BOJ meeting."
The dollar reversed early losses and added 0.2 percent to buy 102.62 yen, while the euro was 0.1 percent higher at $1.1170.
The dollar index, which tracks the U.S. currency against a basket of six major peers, added 0.1 percent to 95.767, holding above Friday's 95.384, its lowest since July 5.
The dollar's upside was heavy on dwindling expectations that the U.S. Federal Reserve is gearing up to hike rates this year, which further faded after Monday's weaker-than-expected manufacturing data. The Institute for Supply Management's (ISM) index of national factory activity dropped to 52.6 in July from 53.2 in June, below market expectations of 53.0.
U.S. crude oil added 0.4 percent to $40.20 a barrel, after shedding 3.7 percent on Monday, while Brent crude was 0.6 percent higher at $42.37 after closing down 3.2 percent.
U.S. crude tumbled below $40 per barrel on Monday for the first time since April, on heightened worries of a supply glut despite peak summer gasoline demand.
(Additional reporting by Shinishi Saoshiro in Tokyo; Editing by Eric Meijer and Sam Holmes)
