By Wayne Cole
SYDNEY (Reuters) - Caution was the watchword among investors on Tuesday, with equity markets mixed and the yen scampering higher ahead of central bank meetings in the United States and Japan.
MSCI's broadest index of Asia-Pacific shares outside Japan did edge up 0.7 percent to reach its highest in almost a year, aided by gains in China and South Korea.
S&P 500 futures added 0.1 pct, while Britain's FTSE 100 was seen opening up 0.2 percent with German stocks all but flat.
Less lucky was Japan's Nikkei which shed 1.5 percent as investors were seemingly unimpressed by a Nikkei report the government planned a direct fiscal stimulus of around 6 trillion yen ($56 billion) over the next few years.
Not helping was a broad rally in the yen, which saw the dollar and euro both lose 1.2 percent to 104.47 and 115.10 yen respectively.
Dealers cited doubts the Bank of Japan would offer any meaningful new stimulus when its policy meeting ends on Friday.
"We think they'll deliver a bit of everything, but not quite the bazooka some may be hoping for," Frederic Neumann, co-head of economics at HSBC, said in a note.
Expanded asset purchases or a further rate cut into negative territory were possible, he said, but the extent of actual stimulus provided would depend on how such measures were implemented.
"Our recent conversations with investors suggest that expectations are all over the place," he added. "The BOJ could simply do nothing. In the age of shock and awe, that would certainly deliver plenty of that."
Markets see almost no chance of a hike by the Fed after its meeting on Wednesday, but are wary in case it acknowledges a recent improvement in U.S. economic data in a way that amplifies the risk of a move later in the year.
Fed fund futures imply a 56 percent chance of a rate hike in December, up from 48 percent on Friday.
The uncertainty kept the dollar range-bound on the euro around $1.1004.
In contrast, sterling took a knock when the Financial Times reported that Martin Weale, a member of the Bank of England's rate-setting committee, had dropped his opposition to an easing and now favoured immediate stimulus.
The pound slipped to $1.3110, from around $1.3140 late in New York, but has chart support in the $1.3060/76 zone.
On Wall Street, the Dow Jones Industrial Average ended Monday with a mild loss of 0.42 percent, while the S&P 500 dipped 0.3 percent and the Nasdaq 0.05 percent.
Apple shares fell 1.3 percent after a broker cut the stock to "sell" ahead of its earnings report on Tuesday.
In commodities, oil loitered near three-month lows as a global glut of crude and refined products weighed on markets.
NYMEX crude was quoted 7 cents firmer at $43.20, after losing 2 percent overnight, while Brent added 15 cents to $44.87 a barrel.
(Reporting by Wayne Cole; Editing by Sam Holmes and Eric Meijer)
