RPT-GLOBAL MARKETS-Dollar up, stocks slip on caution before Fed

                                
 * Asia ex-Japan stocks fall from 3-mth high on profit
taking
                                
 * Shares slip on disappointment over China imports data
                                
 * Investors cautious amid speculation over next Fed move
                                
 * Bond investors split on whether Fed will flag more
stimulus
 (Repeats to more subscribers)
                                
 By Kevin Plumberg
                                
 HONG KONG, Aug 10 (Reuters) - The U.S. dollar rebounded
against the euro and Asian stocks slipped on Tuesday as
investors braced for the outcome of a Federal Reserve meeting
that could disappoint some looking for big policy changes.
                                
 There was no uniform outlook for trade in European shares
after the previous session's gains and as Asian bourses
retreated on China's disappointing import numbers.
                                
 "The risks are now increasingly being weighted on the
downside," noted Cameron Peacock, an analyst at IG Markets.
                                
 "Any perceived failure from the Fed to be taking positive
action over the economy could quite easily be the trigger to
another bout of selling across the globe."
                                
 Shares in Hong Kong <.HSI> and Shanghai <.SSEC> fell after
data showed China's July import growth was below market
expectations, pointing to slowing domestic demand and economic
activity. [ID:nTOE67903G]
                                
 The Bank of Japan kept interest rates steady, as expected,
and held off on any new policy steps, which market players said
had little market impact. [ID:nTOE67900S]
                                
 "Shanghai shares fell quite a lot, as did the rest of Asia,
and this dragged the Nikkei lower. U.S. stock futures have
turned negative as well," said Hiroaki Osakabe, a fund manager
at Chibagin Asset Management.
                                
 Financial spreadbetters expected Britain's FTSE 100 <.FTSE>
to open 8 to 14 points lower, Germany's DAX <.GDAXI> to open
between 3 points higher and 18 points lower, and France's
CAC-40 <.FCHI> to open 10 points either side of the previous
close.
                                
 Speculation has been growing that the Fed will signal a
need for more stimulus to support growth after a steady stream
of soft economic figures, pushing down U.S. bond yields and
helping to lift global equities to the highest in three months.
                                
 However, acknowledgment of economic deceleration may
disappoint some investors who had been betting the Fed would
make a bigger move, such as buying bonds to pull down market
rates.
                                
 "I have a feeling that the market has got carried away with
the idea of the Fed easing. It seems as if most traders are
expecting the Fed to say it will reinvest maturing bonds at
least," said a trader at a Japanese bank.
                                
 The dollar rose 0.5 percent against a trade-weighted basket
of currencies <.DXY>, bumping up against a trendline stretching
downwards since June.
                                
 The euro fell to $1.3160 from $1.3223 on Monday as
investors cut short-dollar positions ahead of the Fed meeting.
[ID:nTOE67904V]
                                
 STOCKS REFLECT CAUTION AHEAD OF FED
                                
 Japanese stocks reversed earlier gains to close lower after
the Bank of Japan left rates unchanged, with the Nikkei share
average <.N225> down 0.2 percent as investors bought back
counters they had sold on Monday.
                                
 The MSCI index of Asia Pacific stocks outside Japan fell
1.2 percent <.MIAPJ0000PUS> to its lowest in four trading
sessions after hitting a three-month high on Monday.
                                
 Developed government bond markets were mixed, with 10-year
bond futures in Japan and Australia down slightly and U.S.
futures steady.
                                
 The spread of the 10-year U.S. Treasury yield over the
2-year note in the cash market hit its narrowest since May
2009, with investors clinging to the higher yields of later
maturity bonds.
                                
 Bond market participants are split on what the Fed will do.
Fifty-two percent of money managers do not expect the Fed to
flag additional policy easing, while 48 percent predict it
will, a Reid Thunberg ICAP survey showed.
                                
 If the Fed does not strike a strong enough tone supporting
growth, thereby getting closer to buying bonds from the market,
the spread could widen again.
                                
 The strength in the dollar weighed on U.S. crude prices.
Oil for September delivery reversed earlier gains and fell 0.7
percent to $80.94 a barrel ahead of data due later expected to
show a decline in U.S. crude inventories.
                                
 Gold was largely unchanged on the day, trading just below
$1,200 an ounce <XAU=>, ahead of the Fed's meeting. The
precious metal is still heading for its 10th straight year of
gains.
 (Writing by Jan Dahinten in Singapore, additional reporting by
Aiko Hayashi in TOKYO; Editing by Neil Fullick)