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Asian stocks stabilize after selloff; Fed meeting watched

Tuesday, 28 Jan 2014 | 5:32 AM ET

Asian equity markets stabilized on Tuesday following two straight sessions of sharp losses but caution prevailed ahead of a Federal Reserve meeting.

Emerging market currencies and stocks saw heavy selling abate as the U.S. central bank starts a two-day policy meeting later in the day, chairman Ben Bernanke's final meeting before Janet Yellen takes on the role. Most analysts expect another $10 billion reduction in its monthly bond-purchase program.

"While it makes sense to be cautious about emerging market shares generally, a re-run of the 1997- 98 Asian crisis is unlikely and emerging markets are unlikely to pose a major threat to global economic recovery," wrote Shane Oliver, head of investment strategy and chief economist at AMP Capital, in a note.

(Read more: Will the Fed throw emerging markets a bone?)

  Name Price   Change %Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Emerging markets steady

EM turmoil isn't likely to impact the Fed: Pro
David Roche, Global Strategist at Independent Strategy, says the current turmoil in emerging markets is not serious enough to impact the Fed's tapering agenda.

Indonesia's Jakarta Composite rose 0.44 percent after shedding 3 percent in the previous session and Thailand's SET index dipped 1.3 percent following Monday's 2 percent fall.

Indian shares reversed gains to fall 0.12 percent after the Reserve Bank of India unexpectedly raised its repo rate by 25 basis points to 8 percent. Reuters economists had expected no change in rates.

(Read more: Are rate hikes on the cards for emerging markets?)

In the currency space, the Indonesian rupiah hovered near Monday's two-week low while the Malaysian ringgit, Thai baht and Indian rupee strengthened. The Turkish lira rebounded nearly 1 percent as markets anticipate a rate hike when the central bank announces the outcome of its emergency policy meeting around 8pm SIN/HK.

Nikkei slips 0.2%

Japan's benchmark index bounced between gains and losses in choppy trade but still managed to move off Monday's two-month low as investors took relief from a weaker currency.

The yen last traded at 102.7 per dollar, well off the previous day's seven-week high of 101.7, boosting blue-chip exporters. Index heavyweight Fast Retailing rose over 1 percent while blue-chip exporters Panasonic and Komatsu also added 1 percent each.

Apple suppliers were dealt a blow after shares of the U.S. tech giant dropped nearly 6 percent in after-hours trade despite upbeat earnings. TDK Corp lost over 5 percent while Daishinku fell 2.5 percent.

(Read more: Nikkei's rout – Is it a signal to buy?)

Shanghai up 0.2%

Mainland shares rebounded following Monday's 1 percent decline after the People's Bank of China (PBOC) injected funds into interbank markets, soothing fears over a new liquidity crunch. On Monday, reports that the PBOC halted bank cash transfers ahead of the upcoming Lunar New Years holiday sparked fears of a nation-wide cash shortage.

Shanxi Coal Industry surged 25 percent in its stock market debut, the biggest mainland listing since the initial public offering market was re-opened last month.

Relax, China's credit squeeze isn't new: S&P
Paul Gruenwald, Chief Economist, Asia Pacific at Standard and Poor's, explains why fears of a new credit crunch in China may be overblown.

Investors also digested data that showed Chinese industrial profit growth slowed in 2013. Profits rose an annual 6 percent in December, slower than November's 9.7 percent.

In Hong Kong, Lenovo surged as much as 6 percent after research firm IDC ranked the firm fifth-largest in the global smartphone market.

(Read more: Global smartphone makers closing in on Apple)

Sydney 1.3% lower

Australia's benchmark index closed at a one-and-a-half-month low as it played catch-up with the region following Monday's holiday. Sentiment was unable to get a boost even after the National Australia Bank's business confidence survey rose to a two-and-a-half-year high, which sent the Australian dollar closer to $0.88 U.S. cents.

Gold miners were among the top losers as gold prices were little changed after Monda's 1 percent fall. Kingsgate fell 5 percent while Alacer Gold lost 4.6 percent.

(Read more: Long gold as a crisis hedge: Is it a loser's game?)

Electronics retailer JB HI Fi climbed 5 percent after reporting a 6.8 percent rise in total sales for the last six months of 2013.

Kospi up 0.3%

South Korean shares recovered after closing at a five-month low in the previous session, while the won rose after hitting a four-month low against the dollar on Monday.

Apple suppliers LG Innotek and LG Display lost 3 percent each while steelmaker Posco fell 0.5 percent ahead of reporting quarterly earnings.

By CNBC.com's Nyshka Chandran. Follow her on Twitter @NyshkaCNBC

  Price   Change %Change
NIKKEI
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ASX 200
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USD/BRL
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USD/INR
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USD/IDR
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TRY=
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DJIA
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CAT
---
AAPL
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USD/ARS
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JPY/USD
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3422
---
549
---
BLT
---
RIO
---
AUD/USD
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6752.T
---
992
---
JSX COMP
---
THAI SET
---
KCN
---
USD/MYR
---
ASR
---
USD/THB
---
9984.T
---
9983.T
---
6301.T
---
FMG
---
6954.T
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