* Asian equity markets, commodities steadier after fall
* Dollar bounce loses steam
* Market seen volatile in lead up to FOMC meeting
By Ian Chua
SYDNEY, Oct 28 (Reuters) - Asian stock markets rose on
Thursday, having suffered their biggest one-day fall in four
months, as a rebound in the dollar paused after the greenback
recovered all of its losses against major currencies this year.
The selloff in commodities also halted with copper, which
dropped more than $200 a tonne on Tuesday, its steepest decline
since late June, gaining $28 to $8,328 a tonne.
Financial markets have been volatile this week as
speculation intensifies over how much the Federal Reserve is
likely to spend to pump up a faltering recovery and whether
such new measures will be carried out swiftly or phased in over
time.
Analysts expect choppy market action to persist in the lead
up to the Nov. 2-3 policy-setting meeting.
The latest Reuters survey showed most leading economists
expect the Fed to buy between $80 billion and $100 billion
worth of assets per month, with estimates for how much it will
eventually spend varying from $250 billion to $2 trillion.
In a similar Reuters poll of primary dealers on Oct. 8,
dealers mostly forecast the total size of the new programme at
$500 billion to $1.5 trillion. []
Market participants have begun to scale back expectations
of the Fed's intentions. The Wall Street Journal said on
Wednesday the Fed is likely to unveil an asset-purchase program
worth a few hundred billion dollars over several months.
It said officials want to avoid a "shock and awe" approach
in their announcement, expected next week. For details, see
[].
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a survey on size of QE, click [] For
possible FOMC outcomes, click []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The MSCI index of Asia Pacific stocks outside Japan rose 0.6
percent <.MIAPJ0000PUS>, having slid nearly 2 percent on
Tuesday -- its biggest one-day percentage fall since late June.
Still, it remained close to a 28-month high hit last week.
"It's going to remain volatile. If nothing else, markets
are a bit overbought short term," said Shane Oliver, head of
investment strategy at AMP Capital Investors in Sydney.
Japan's Nikkei stock average <>, which was spared the
selloff seen in the region on Tuesday, slipped 0.1 percent,
while Australia's S&P/ASX 200 index <> rose 1.1 percent
and Korea's KOSPI <> gained 0.1 percent.
Among the top performers, shares in Canon Inc <7751.T>
rallied more than 4 percent, after the world's largest maker of
digital cameras posted strong quarterly results and raised its
full-year outlook.
"Shares of firms with bullish earnings are being snapped
up, but that hasn't spread to similar stocks or sectors as
investors are generally more concerned about the implications
from today's BOJ meeting and the U.S. Federal Reserve meeting
next week," said Mitsuo Shimizu, deputy general manager at
Cosmo Securities.
In Australia, upbeat earnings helped drive ANZ shares
<ANZ.AX> up 3.2 percent, while bourse operator ASX <ASX.AX>
climbed about 2 percent after two days of sharp losses due to
uncertainty over Singapore Exchange's <SGXL.SI> $7.9 billion
bid.
The MSCI's emerging market stock benchmark <.MSCIEF> edged
up 0.1 percent.
DOLLAR PAUSES
The U.S. dollar eased against a basket of six major
currencies <.DXY> after two straight days of gains helped the
index climb back into positive territory for 2010.
The euro rose to $1.3801 <EUR=> from $1.3764 late in New
York, while the dollar eased to 81.62 yen <JPY=> from 81.69
yen, hovering not far from a record low of 79.75 yen.
"We suspect the Fed will confirm that medium-term deflation
risks still justify easing, and with 10-year rates now above
Jackson Hole levels, the resulting rally in bonds should soften
the dollar again," said JPMorgan analyst Justin Kariya.
U.S. 10-year yields <US10YT=RR> were up for the sixth
session in a row at 2.72 percent, effectively lifting them
above levels seen in late August when the Fed warned more
policy easing was needed at a central banker's meeting in
Jackson Hole.
The New Zealand dollar was one of the best performers
early in Asia after brushing aside a widely expected decision
by the Reserve Bank of New Zealand to hold rates steady at 3
percent.
The kiwi dollar <NZD=D4> was last at $0.7477 versus $0.7439
late in New York. Also firmer, the Aussie dollar <AUD=D4> rose
to $0.9742 from $0.9718.
U.S. light sweet crude oil <CLc1> was little changed at
$82.00 per barrel while spot gold <XAU=> was 0.2 percent higher
at $1,326.67 an ounce.
(Additional reporting by Aiko Hayashi in Tokyo, Koh Gui
Qing in Sydney and Manuela Badawy in New York)
