By Hideyuki Sano
TOKYO (Reuters) - Japanese shares shed early gains on Wednesday as investors booked profits after Prime Minister Shinzo Abe delayed a tax hike and said he would call a snap election to seek a fresh mandate for his economic policies.
Asian shares were mixed but MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.4 percent to a three-week low as resource shares were hit by price-falls for oil and other commodities.
"The fall in energy costs is positive for many economies but they are hurting large-cap resource shares, which have a big presence in many Asian markets," said Yukino Yamada, senior strategist at Daiwa Securities.
European shares could extend their gains and reach a seven-high week in the wake of Tuesday's surprisingly strong German economic sentiment data. Spreadbetters looked for a 0.2 percent rise at the opening for Germany's DAX and France's CAC 40.
Japan's Nikkei dipped 0.3 percent but the broader Topix index rose 0.1 percent to hit a six-year high on hopes that Abe's tax-hike delay by 18 months will help shore up the world's third-biggest economy, which unexpectedly slipped back into a recession.
In current economic conditions, "postponing the consumption tax would be positive for stocks," Ryota Sakagami, chief strategist at SMBC Nikko Securities, said in a report.
"But the ruling party bloc is likely to reduce their seats. Their victory is unlikely to create hopes for big changes. So we do not anticipate the type of boom in Japanese stocks we saw after elections in 2005 and 2012," Sakagami added.
Few expect Abe's Liberal Democratic Party and its smaller ally to lose their majority, but financial markets and analysts are now contemplating the possibility that the ruling bloc might fare less well than initially anticipated.
Investors are now looking to what Bank of Japan Governor Haruhiko Kuroda would say about the country's slide into recession and Abe's decision to delay the tax hike - something Kuroda has said is not advisable. Kuroda holds a news conference at 0630 GMT.
The BOJ stunned markets last month by expanding its monetary easing programme to preempt a slowdown in inflation.
The Japanese yen hit a seven-year low, as it continued to feel the pressure from the BOJ's extremely loose policy while the U.S. dollar also benefitted from hopes of a solid recovery in the U.S. economy.
The dollar rose as high as 117.42 yen, high last seen in 2007. The euro also hit a six-year high of 146.99 yen.
The euro held firm against the dollar at $1.2524, after German analyst and investor sentiment rose unexpectedly in November for the first time in almost a year.
The ZEW index surpassed even the most bullish forecast, raising hopes of an improvement in Europe's biggest economy after it dodged recession in the third quarter.
The Australian dollar tumbled as the price of iron ore, Australia's top export earner, slipped to its lowest in five years at $72.10 a tonne.
Later in the day, the U.S. Federal Reserve will release the minutes of its last policy meeting, which markets will watch for any clues on when the Fed will start raising rates.
U.S. debt yields dipped on Tuesday as benign wholesale inflation figures cemented the view that the Fed can afford to wait for an extended period before raising rates.
The 10-year U.S. 10-year yield stood at 2.320 percent in early Asia, after having dipped about 2.5 basis points on Tuesday.
One major reason inflation is subdued in the United States - and elsewhere - is because of falling oil prices over the last five months, partly on oversupply concerns as U.S. shale oil production has increased.
Oil prices were depressed near four-year lows after two straight days of falls so far this week as traders looked to whether the OPEC will agree on an output cut at its Nov. 27 meeting.
U.S. crude futures slipped 0.4 percent to $74.34 per barrel, near last week's low of $73.25, having fallen more than 31 percent in the last five months.
(Editing by Kim Coghill and Richard Borsuk)
