By Wayne Cole
SYDNEY (Reuters) - Asian share markets faded from seven-year peaks on Wednesday while investors exited crowded positions in the U.S. dollar as the Federal Reserve wraps up a two-day policy meeting.
The broad retreat in the U.S. currency came as a string of soft data seemed to push back the day when the Fed might start lifting rates, and defied a jump in Treasury yields.
Trading was thinner on Wednesday with Japanese markets on holiday and little in the way of major data due in Asian time.
That helped the dollar index <.DXY> stabilize at 96.103 after touching the lowest since March 5. The euro stood at $1.0972
The dollar fared better on the yen at 118.84
Talk of more aggressive policy easing in China has also put a bid under many regional stock markets, though the scale of recent gains attracted profit taking on Wednesday.
Shanghai's main index <.SSEC> edged back 0.8 percent, but is still up nearly 40 percent on the year so far. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> eased 0.6 percent having touched their highest since early 2008.
Australian stocks <.AXJO> slid 1.2 percent after repeatedly shying away from a major psychological barrier at 6,000.
On Wall Street, the Dow <.DJI> had ended Tuesday with gains of 0.4 percent, while the S&P 500 <.SPX> rose 0.28 percent and the Nasdaq <.IXIC> dipped 0.1 percent.
Aiding the Dow was a 1.9 percent gain in IBM
Apple
The Fed's latest policy statement will come just hours after data are expected to show the U.S. economy grew at a pedestrian 1 percent annualized pace in the first quarter, partly due to bad weather and a port strike.
The Fed has so far played down the softness in the hope of a rebound in the second quarter, and there have been hints of a much-needed upturn in wages and inflation.
"Investors are approaching FOMC with the view it will bore as much as possible. The risk is that what is neutral to the Fed may be surprisingly upbeat to the market," said analysts at Citi.
"We would not see this as a big near-term boost to the dollar and bond yields, but more a reminder that the Fed remains hopeful that data will improve sufficiently for a lift off in September."
Yields on 10-year U.S. Treasury bonds were near one-month highs at 2.010 percent on Wednesday
Oil prices slipped as expectations U.S. crude stockpiles have reached record highs offset security scares in the Middle East and support from a softer dollar.
Brent crude
(Editing by Shri Navaratnam and Jacqueline Wong)
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