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Aug 28, 2012, 10.59 AM IST
Markets from stocks to currencies were caught in ranges on Tuesday as investors waited for a gathering of central bankers and economists at Jackson Hole, Wyoming, later in the week for clues over the Federal Reserve's potential easing options.
"The Asian data calendar is second tier today, leaving the focus firmly on regional equities, particularly Shanghai," Westpac Institutional Bank said in a note, noting Monday's fall.
MSCI's broadest index of Asia-Pacific shares outside Japan steadied in early trade, after falling to a three-week low on Monday.
The dollar firmed against the yen at 78.76 and the euro steadied at $1.2503, off Monday's low of $1.2490 touched after Germany's Ifo business sentiment index fell for a fourth month in a row to its lowest level since March 2010.
Shanghai shares hit their lowest level since March 2009 on Monday, as hopes faded for more "formal" monetary easing to underpin China's fragile growth, after the Chinese premier failed to refer to the possibility in recent comments.
"We believe the cautious (Chinese) response reflects mixed economic assessments from government officials, the acceleration of inflation in July, and lack of clear policy direction during a period of political transition," said Barclays Capital analysts in a research.
Japan's Nikkei average opened up 0.6 percent.
"Foreign investors' trading yesterday was subdued. This is their last week of summer holiday before U.S. Labor Day. So we are likely to see a range-bound trade today," said Eiji Kinouchi, chief technical analyst at Daiwa Securities, of Japanese equities.
The post month's broad-based rally has been driven by hopes for further monetary stimulus from the Fed through a third round of bond buying or other easing measures, and expectations the European Central Bank will deliver on a pledge to drive down borrowing costs.
But investors have become wary as the rally has extended in absence of any concrete action.
The Fed should launch a fresh round of monetary stimulus immediately, buying bonds for as long as it takes to produce a steady decline in the jobless rate, Chicago Federal Reserve Bank President Charles Evans told reporters in Hong Kong on Monday.
Fed Chairman Ben Bernanke will speak at the annual Jackson Hole meeting on Friday ahead of the Fed's September 12-13 policy meeting. He has used the event in the previous two years to signal the Fed's policy intentions. ECB President Mario Draghi is due to speak at the event on Saturday.
Next month will be pivotal for Europe, with the ECB's policy meeting on September 6 followed by the German Constitutional Court's ruling on the euro zone's permanent bailout fund on September 12.
ECB board member Joerg Asmussen said on Monday that the ECB will tailor its new bond-buying plan to dispel any concerns that it funds governments, and while he stopped short of when the bank would begin buying, he made clear the plan would go ahead despite Bundesbank opposition.
Greece will also face scrutiny next month from its global lenders who will assess Athens' progress in debt cutting efforts before deciding on an aid to keep the country afloat.
Government officials have told Reuters that Greece estimates a two-year extension on its bailout would create a financing gap of less than 18 billion euros, which could be covered by issuing short-term debt.
Oil inched up, with U.S. crude futures up 0.2 percent to $95.69 a barrel and Brent up 0.1 percent at $112.41.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by Richard Pullin)
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