Asian markets pared back losses Wednesday, with Tokyo closing just slightly lower. Concerns about the U.S. economy cast a cloud over the session and trade remained cautious as investors awaited the outcome of the Fed's two-day meeting, which is expected to leave interest rates at 2 percent.
The U.S. dollar fell on poor consumer confidence and housing sales readings. The Fed is seen as having a tough time raising interest rates over the coming months, as a weakening economic outlook is matched by rising food and energy prices.
Japan's Nikkei 225 Average finished down slightly lower, off 0.14 percent, with Toyota Motor and other exporters sold as worries about the U.S. economy hit blue-chip performers in Japan's export-oriented economy. The Nikkei's fifth straight negative day -- its worst losing streak this year -- also saw property developers suffer after real estate firm Suruga Corp said it had filed for court protection from creditors.
Seoul shares closed slightly higher, boosted by institutional buying in the final hour of trading after four consecutive losing sessions, with gains by banks and steelmakers lending support to the index. Shares in the country's top mobile phone operator SK Telecom rose 2.6 percent, boosted by media reports that Virgin Mobile USA was set to acquire its U.S. mobile arm Helio.
Australian shares fell 1 percent, led down by miners such as BHP Billiton which retreated sharply as weaker metals prices were taken as a cue to take profits.
Singapore's Straits Times Index bounced back from the morning's slide to close 0.8 percent higher, supported by gains in telecoms and bank stocks. Shares of Singapore-listed palm oil firms such as Wilmar International and Indofood Agri Resources fell on news of a fall in exports of Malaysian palmoil products for June.
Blue chips powered China's Shanghai Composite Index 3.6 percent higher as investors looked for bargains amid talk that the market's recent bear run may finally have left valuations at reasonable levels. The country's largest bank, Industrial & Commercial Bank of China rose 1.5 percent while property giant Vanke climbed almost 5 percent.
Hong Kong's financial markets opened for the afternoon session, after closing for the morning due to tropical storm Fengshen. The Hang Seng gained 0.7 percent in late trading.