Asian shares hit six and a half year high, dollar steady before Fed

Tue Jul 29, 2014 11:42pm EDT
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By Lisa Twaronite

TOKYO (Reuters) - Asian shares touched a six-and-half-year peak while the dollar held steady against the euro on Wednesday, as investors awaited key U.S. data as well as a U.S. Federal Reserve meeting that some believe might result in a more hawkish policy outlook.

In addition to second-quarter U.S. growth figures, investors awaited the conclusion of the Fed's two-day policy meeting and its policy statement scheduled to be released at 2 p.m..

The Fed will not be updating its economic forecasts and Chair Janet Yellen will not hold a news conference, keeping investors' focus squarely on the statement.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shrugged off early losses to rise 0.5 percent to its highest level since January 2008, while Australian shares .AXJO climbed to their highest level since June of that year.

"In the end it's really part of a global rally, it's been underpinned by the U.S., where economic growth is seen to be improving albeit slowly, and earnings growth in Australia looks reasonable at this stage," said Matthew Sherwood, head of investment market research at Perpetual in Sydney.

Japan's Nikkei stock average .N225 added about 0.3 percent, as upbeat earnings offset weaker-than-expected industrial production data which cast doubts over the strength of an expected third-quarter economic recovery.

Output fell 3.3 percent in June, the fastest rate since the devastating earthquake and tsunami in March 2011, as companies put on the brakes due to a pile-up in inventories. But manufacturers expect output to rise in the coming months. [ID:nT9N0P602N]

"Macro funds including overseas pension funds are shifting to Japanese shares from U.S. shares as valuations of Japanese shares are cheaper," said Kyoya Okazawa, head of global equities at BNP Paribas.   Continued...

Pedestrians cross a road in front of an electronic board showing various stock prices outside a brokerage in Tokyo July 22, 2014.  REUTERS/Yuya Shino