Asia hurt by Wall Street loss, dollar dips

By Lisa Twaronite
A man looks at an electronic board outside a brokerage in Tokyo
A man looks at an electronic board showing graphs of the recent exchange rate movements between the Japanese yen and foreign currencies including the U.S. dollar outside a brokerage in Tokyo May 16, 2014. REUTERS/Yuya Shino

By Lisa Twaronite

TOKYO (Reuters) - Asian shares caught Wall Street's gloom in early trading on Wednesday, while the dollar languished for a sixth straight session against the yen.

The dollar was unlikely to get any help from the Bank of Japan, which was widely expected to hold policy steady and maintain its upbeat assessment of the economic recovery at the conclusion of its regular two-day meeting later on Wednesday.

"We expect the BOJ to keep its monetary policy and economic assessment intact," strategists at Barclays wrote in a note to clients.

The BOJ may even raise its assessment of capital expenditure, which could pressure the dollar further against its Japanese counterpart.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> shed 0.3 percent, after U.S. stocks broadly dropped on Tuesday, with major indexes hitting session lows in afternoon trading as downbeat results pressured the retail sector.

Investors also kept a wary eye on the situation in Thailand, where the army declared martial law on Tuesday after months of civil and political unrest.

Japan's Nikkei stock average skidded 0.6 percent, with the stronger yen casting a shadow over exporter shares.

Japanese trade data for April released shortly before the market opened showed that the country posted a record 22-month run of trade deficits, though last month's rise in exports beat forecasts.

The dollar slipped about 0.1 percent against the yen to 101.26 yen, not far from Monday's low of 101.10 yen, which was its weakest level since early February.

U.S. Treasury yields have recently wallowed around half-year lows, undermining the appeal of dollar-based assets.

The yield on benchmark U.S. 10-year notes inched down to 2.507 percent in Asia from its U.S. close of 2.509 percent on Tuesday.

Later on Wednesday, the U.S. Federal Reserve will release the minutes of its latest policy meeting, though most market participants did not expect any solid clues to emerge on the timing of a future hike to interest rates.

New York Federal Reserve President William Dudley said at an event on Tuesday that the U.S. central bank will likely be "relatively slow" in hiking interest rates.

The euro was flat on the day at $1.3702, not far from a nadir of $1.3648 touched on Thursday, which was its lowest since late February.

In commodities trading, U.S. crude rose 0.6 percent to $102.90 per barrel.

(Editing by Shri Navaratnam)