Asian stocks drift lower as investors await Fed

HONG KONG -- Asian stocks drifted lower as investors awaited an update on the U.S. economy later Wednesday from the Federal Reserve following its two-day policy meeting, while Japanese markets rose on a weaker yen.

Equity investors have been holding back this week as they look ahead to the Fed's meeting and its implications for the economy. The central bank is expected to update its forecasts for the world's biggest economy and scale back economic stimulus another notch. It's less certain whether policymakers will give any hints on when they want to start raising short-term interest rates from record lows.

"Markets will focus on any adjustments to growth and inflation outlook, and especially on any shifts in guidance provided on the timing of the first hike," analysts at Mizuho Bank said in a report.

Investors will be looking for clear signs on the direction of the U.S. economy following some mixed data that showed U.S. inflation hit its highest in more than a year but home construction data disappointed.

Japan's benchmark Nikkei 225 rose 1 percent to 15,127.74 as the dollar strengthened 0.1 percent to 102.28 yen. A weaker yen makes the cars and electronics made by the country's export giants less costly for overseas buyers.

South Korea's Kospi shed 0.6 percent to at 1,989.34 while Hong Kong's Hang Seng was flat at 23,184.42. In mainland China, the Shanghai Composite Index lost 0.5 percent to 2,055.78.

Australia's S&P/ASX 200 slipped 0.2 percent to 5,388.70. Woodside Petroleum Ltd. led declines on the Australian market, falling 4.7 percent a day after oil giant Royal Dutch Shell PLC said it's selling a 19 percent stake worth around $5 billion.

Benchmarks in New Zealand, Thailand, Indonesia and the Philippines also fell.

On Wall Street, The Dow Jones industrial average closed 0.2 percent higher at 16,808.49 and the Standard & Poor's 500 index rose 0.2 percent to 1,941.99. The Nasdaq composite gained 0.4 percent to 4,337.23.

In energy trading, benchmark crude oil for July delivery edged added 5 cents to $106.41 in electronic trading on the New York Mercantile Exchange. The contract dropped 54 cents to settle at $106.36 on Monday.

The euro fell to $1.3546 $1.3547 in late trading Tuesday.