Asian shares, dollar tread water ahead of Fed

By Lisa Twaronite TOKYO (Reuters) - Asian shares and the dollar fell slightly in early trade on Tuesday, mired in recent ranges as investors wait for commentary from the U.S. Federal Reserve after this week's policy meeting, where it is widely expected to keep policy on hold. Economists and market participants see no change in the Fed's $85 billion monthly asset purchase programme at the two-day meeting ending on Wednesday. Most predict the central bank to delay any stimulus tapering to at least March next year. Monday's U.S. economic data offered nothing to alter this view. U.S. manufacturing output barely rose in September and contracts to buy previously owned homes fell the most in nearly 3-1/2 years, showing economic activity was on a weak footing even before a 16-day partial shutdown of the U.S. federal government that is expected to weigh on fourth quarter growth. "We expect little change in the Fed's statement at the October FOMC meeting," strategists at Barclays wrote in a client note. "The soft industrial production report, plus the larger-than-expected decline in pending home sales, is unlikely to give comfort to FOMC policymakers who await stronger economic data before initiating tapering," they said. Australian shares eased in early trade after surging 1 percent on Monday to a new five-year high. MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1 percent. U.S. S&P E-mini futures were down 0.1 percent in early Asian trade on Tuesday after the S&P 500 Index closed at a record high in New York on Monday. The dollar index, which tracks the greenback against a basket of six major currencies, was steady at 79.332, holding above a nine-month low of 78.998 hit on Friday. The dollar was nearly flat at 97.69 yen, managing to stay above a more than two-week low of 96.92 yen hit on Friday, according to Reuters data. The Bank of Japan also meets this week, and is expected to maintain its monetary policy on Thursday as it aims for its target of 2 percent inflation in two years. The euro was nearly flat at $1.3786, not far from Friday's high of $1.3832, its highest level since November 2011. Spot gold was little changed at $1,352.04 an ounce after rising to a five-week high of $1,356.50 on Monday. (Editing by Richard Pullin)