Asian shares up, dollar weak after Fed

SINGAPORE, Dec 13 (Reuters) Asian stocks rose on Wednesday, shrugging off weakness on Wall Street, as signs of a slower U.S.

economy reinforced expectations that the U.S. Federal Reserve's next move will be to cut interest rates.

The yen fell to a fresh record low against the euro as prospects for a Japanese rate hike next week appeared to dwindle, while crude oil and gold prices were mostly steady.

The Fed on Tuesday left U.S. rates unchanged for a fourth straight meeting, renewing a warning on inflation but nodding to mixed economic signals and a ''substantial'' housing slowdown.

The Fed departed from its last statement in October by noting the scope of the housing downturn and cross-currents in recent data -- shifts which financial markets took as hints the central bank's focus on inflation was softening.

''Talk of the possibility of a (U.S.) rate rise is fading as inflation pressures subside,'' said a trader at a Japanese bank.

''I think the Fed will start to signal that it is turning more of its attention to the state of the economy.'' The prospects of a fall in U.S. rates would hearten Asian exporters, who rely heavily on U.S. consumption. Hyundai Motor gained 1.7 percent while Japan's Canon Inc., the world's top maker of copiers and digital cameras, rose nearly 1 percent.

MSCI's measure of Asian stocks excluding Japan was up 0.3 percent by midmorning in Asia, steadying after four straight losing sessions.

Australian shares rose to a record high thanks to upbeat profit outlooks from firms such as CSL Ltd. . The maker of blood plasma products jumped 6.4 percent while the broader market gained 0.4 percent.

But shares in Qantas slid 4.4 percent after the airline rejected a A.9 billion (.6 billion) buyout offer led by Macquarie Bank and Texas Pacific Group.

Japan's Nikkei average was steady, kept in check by a 1.7 percent fall in shares of Sharp Corp., the latest Asian flat-screen maker to reveal it was under investigation over possible price-fixing for liquid crystal displays.

In Korea, shares of flat-screen maker LG.Philips LCD Co. Ltd.

hovered near record lows plumbed on Tuesday, when it also had said it was being investigated.

But the broader Korean market rose 0.5 percent on hopes for an improved economic outlook next year.

Hong Kong bucked the generally firm trend, shedding 0.5 percent as investors cashed in profits before the year's end by selling recent high fliers such as Chinese telecoms firms.

U.S. stocks slipped on Tuesday after disappointing earnings from electronics chain Best Buy Inc. and a weak forecast from steel maker Nucor Inc. dented confidence in the outlooks for the holiday shopping season and corporate profits.

The Dow Jones industrial average fell 0.10 percent, while the Nasdaq Composite Index lost 0.46 percent.

The dollar remained weak after the Federal Reserve toned down its tightening bias on monetary policy, suggesting that its next move could be to cut rates. The dollar was little changed at 116.86 yen after slipping 0.2 percent on Tuesday.

But the yen fell to a fresh record low against the euro on expectations that the Bank of Japan will not raise rates at a meeting next week, which would keep yen rates lagging more than 3 percentage points behind euro levels.

The euro rose to 155.33 yen, its highest level since the single European currency was launched in 1999.

Gold was little changed, fetching around 9.20 an ounce, while crude oil for January delivery eased 8 cents to .94 a barrel, due in part to mild weather in the U.S. Northeast, the country's biggest heating oil-consuming region.

REUTERS LL ND1058