The dollar lost ground on Wednesday after hitting a one-month high against a basket of currencies, while Asian stocks edged higher in muted trade ahead of central bank meetings that kept investors wary.

Most Read

Business Quiz | GamesNew SBI to close its 8% home loan scheme Kareena Kapoor unveils Sony's ultra-slim notebooks Govt asks listed PSUs to expand equity bases Mobile termination charges may be cut Images: Why is RBI buying gold from IMF? Big deals begin to click again for IT companies Images: Tata Range Rover @ Rs 98.5 lakh Follow us on Twitter

Oil fell for the first time in three days after a 2 per cent surge on Tuesday and gold eased after hitting a record high, but the afterglow helped boost resource-linked shares.

More India business stories

Most investors turned their attention to the US Federal Reserve, which ends its two-day meeting on Wednesday. While it is expected to keep interest rates unchanged, some in the market wonder if it might drop or alter its pledge to keep rates low for an "extended period".

"There is some speculation that they will soften their reference to 'extended period' and I agree that they'll have to do that soonish, yet I am not convinced they will do it at this meeting," said Adam Carr, senior economist at ICAP.

"It's the ongoing risk though and there is clearly a very vigorous debate occurring at the Fed," he added.

The dollar lost 0.1 per cent to 76.336 against a basket of currencies after climbing as far as 76.817, its highest since early October, while the Aussie fell after Australia's September retail sales were much weaker than expected.

The greenback also lost 0.1 per cent against the yen

Stock markets gained, although rises were muted as investors awaited clues to the timing of eventual shifts in central banks' policies.

Australian shares edged up 0.1 per cent as mining shares climbed, while Seoul stocks rose nearly 1 per cent on the back of robust quarterly earnings by Shinhan Financial Group and Korea Exchange Bank.

The MSCI index of Asia Pacific stocks outside Japan rose 0.8 per cent.

Japan's Nikkei was flat, with the market supported after US indicators such as the factory gauge from the Institute for Supply Management pointed to a brisk pace of growth in the fourth quarter. But a lack of direction prior to the central bank meetings kept gains capped.

Japanese markets were closed on Tuesday for a holiday.

Fast Retailing advanced 3.1 per cent after sales at its Uniqlo casual-clothing chain in Japan surged 35.7 per cent in October from a year earlier, the biggest jump in over eight years, as cost-conscious consumers snapped up jackets and other winter items.

Eyes on bank meetings

But overall share gains were limited in the wake of a mixed performance by US markets. The S&P 500 and Nasdaq rose slightly on Tuesday as news of a major railroad acquisition helped sentiment, but the Dow edged lower on caution as the Federal Open Market Committee began a two-day meeting.

"The market's in a corrective phase, that's why there's not a lot of conviction," said Don Williams, chief investment officer at Platypus Asset Management. "Ultimately we're waiting for the US market to find its feet."

Markets are also holding their breath ahead of European bank meetings. The European Central Bank and the Bank of England are expected to keep rates unchanged on Thursday.

Gold eased slightly as investors took profits a day after it hit record highs, though sentiment remained good on bullion's growing status as a destination for diversifying official reserves.

Spot gold was at $1,081.80 per ounce, down from New York's notional close $1,084.50. On Tuesday, spot gold hit an all-time high of $1,087.45.

More India business stories

US crude oil futures fell for the first time in three days on Wednesday, heading towards $79 a barrel after industry data showed a larger than expected build in US gasoline inventories and a surprise build in distillate supplies.

NYMEX crude for December delivery lost 30 cents to $79.30 a barrel by 0210 GMT, after settling up $1.47 at $79.60 on Tuesday.