* MSCI ex-Japan up 0.9 percent, HK leads gains
* Dollar on backfoot as Fed looks set to ease policy
* U.S. election outcome seen positive for stocks
By Sugita Katyal
SINGAPORE, Nov 3 (Reuters) - Asian stocks rose on Wednesday
tracking overnight gains on Wall Street while the dollar was
under pressure ahead of a Federal Reserve meeting that is
expected to provide more stimulus to spur a flagging recovery.
European shares also opened higher as a swing towards the
Republicans in U.S. elections lifted investor sentiment.
The MSCI index of Asia Pacific stocks outside of Japan
<.MIAPJ0000PUS> was up 0.9 percent helped by gains in materials
and energy in line with Wall Street.
Hong Kong's Hang Seng Index <> led the gains in Asia
leaping to their highest in 28 months spurred by gains in
banks, property and oil counters. The index jumped higher after
breaking above a key Fibonacci retracement level.
South Korea's KOSPI <> closed up 0.9 percent on
foreign buying with banks and insurers up amid strengthening
expectations for an interest rate hike after the Australia
central bank's surprise decision to increase rates.
Japan's financial markets are closed because of a public
holiday.
The dollar stayed on the backfoot in Asia with the euro
holding around $1.4000 <EUR=> and the Aussie <AUD=> just off
parity ahead of the Fed meeting.
Traders said the market was unwilling to make new bets
ahead of the U.S. central bank's policy decision.
"The announcement itself could well be a non-event, since
so much is priced in, but in the medium- and longer-term, Asia
looks increasingly set to be on the receiving end of a lot more
capital inflow," DBS said in a research note.
"Inflows are likely to be strong for the next 5-10 years as
Asian demand growth outpaces that of the G3," it said.
"Currencies will remain under upward pressure and ditto for
equities."
Due at around 1815 GMT, the Fed is expected to announce
plans to buy hundreds of billions of dollars in U.S. government
debt in order to foster a stronger economic recovery.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a preview on the Fed meeting []
For a PDF special report: http://link.reuters.com/pyb23q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Markets are generally priced for the Fed to initially
commit to buying at least $500 billion in Treasuries over five
months, although much uncertainty surrounds the scope and pace
of bond purchases.
"Should the Fed deliver a bigger outcome, say in the region
of $1 trillion or above, the U.S. dollar will likely come under
renewed pressure. However, a more cautious amount of asset
purchases will be U.S. dollar positive," said Mitul Kotecha,
head of global FX strategy at Credit Agricole in Hong Kong.
"If we see a more cautious Fed, euro/dollar will slip back
below $1.40, cable below $1.60. We're going to see Aussie give
up some of its gains."
Markets have also kept an eye on the results of U.S.
mid-term elections on Tuesday. Television networks projected
the Republicans would seize control of the House of
Representatives although the Democrats were likely to maintain
the Senate.
A divided Congress is typically seen as bullish for stocks
as it makes passing new laws harder and lessens uncertainty for
business.
Some analysts have said a Republican victory could be
positive for the U.S. currency on market hopes for increased
fiscal austerity and less government regulation. But the main
market focus is still on the Fed.
Gold inched down despite the weaker dollar as investors
stayed on the sidelines on the last day of the Federal
Reserve's meeting.
Gold <XAU=> eased $2.40 to $1,354.60 an ounce, off a
two-week high at $1,365.49 hit on Monday. Gold struck a record
around $1,387 last month.
Oil climbed to a six-month high above $84 for a second
straight session after an industry report showed declines in
U.S. inventories across fuel categories, a sign chronic
oversupply may subside in the world's top user.
U.S. crude for December <CLc1> rose 36 cents to $84.26,
after touching $84.50 earlier on Wednesday, the highest
intraday price since May 4. ICE Brent <LCOc1> rose 30 cents to
$85.71.
(Additional reporting by Jun Ebias in HONG KONG and Ian
Chua in SYDNEY; editing by Kazunori Takada)
