Asian stocks mostly higher ahead of Fed decision
Asian stock indices closed mostly higher on Wednesday ahead of the Federal Reserve's policy decision.
Japan's Nikkei index climbed to a two-month high, while both the Shanghai Composite and Indian stocks erased earlier losses to post modest gains. However, Australia's S&P ASX 200 bucked the trend to end lower in rangebound trade.
South Korean markets are shut for the rest of the week for public holidays.
Federal Reserve policymakers kicked off their two-day meeting on Tuesday and a decision will be released later on Wednesday, followed by Chairman Ben Bernanke's news conference. Investors expect the central bank to scale back purchases by $10 billion a month while keeping rates close to zero for some time.
(Read more: Fed taper? Might as well be tightening, Wien says)
"If the Fed doesn't taper, I don't think that will be a shock at all, it's going to catch people by surprise and the bond market will absolutely rip. You'll see yields go right back down to 2 percent really fast," said Bill Smith, CEO and Senior Portfolio Manager at SAM Advisors.
Nikkei rallies 1.3%
Japanese equities closed at their highest levels since July 25 thanks to a weaker yen. The currency traded at 99.2 per dollar, well-off Monday's two-week high of 98.45, boosting the competitive advantage of exporters in overseas markets.
Industrial manufacturers led the gains with semiconductor maker Tokyo Electron increasing over 5 percent and robotics maker Fanuc higher by 2.4 percent.
Shanghai 0.3% higher
China's benchmark index erased earlier losses thanks to rising optimism over Shanghai's planned free trade zone (FTZ). The index earlier fell below 2,184 points to hit its lowest level since September 9th.
(Read more: Is Shanghai's free trade zone really a game changer?)
Stocks linked to the FTZ extended their rally with Shanghai International Port higher by 3.6 percent and Shanghai Material Trading surging 10 percent after China's Ministry of Commerce said the FTZ will officially be launched on October 1.
Meanwhile, real-estate developers were in focus after average new home prices in 70 major cities rose 8.3 percent from 2012, marking the eighth straight month of annual increases.Shanghai Shimao and China Merchants Property rose 1.5 percent each.
India up 0.8%
India's benchmark Sensex index reversed morning to losses to enter positive territory as the rupee traded higher at 63.1 per dollar.
(Read more: Thankfully, 'hot money' is sticking with India)
Sydney sheds 0.2%
Australia's benchmark index traded in a narrow range between 5,254 and 5,227 points, closing well-below Tuesday's five-year closing high as weak commodity prices weighed on resource stocks.
Newcrest Mining shed 3 percent while Perseus Mining fell 3.5 percent as goldextended losses for a third session. Oil and gas firms also weighed after Brent crude slipped below $108 a barrel. Paladin Energy tanked over 6 percent while Karoon Gas lost 4 percent.
— By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC