Asia Mixed in Cautious Trade Ahead of Fed

Asian stocks were mixed on Tuesday, as nervous investors awaited the U.S. Federal Open Market Committee's latest update on its stimulus program when it kicks-off a two-day meeting later in the day.

Japan's Nikkei reversed early gains to close down 0.2 percent, Australia's benchmark S&P ASX 200 finished 11 points lower, and the Shanghai Composite ended flat. South Korea's Kospi was the sessions's out-performer, jumping 1 percent to regain the 1,900 mark.

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Fed in Focus

The two-day Federal Reserve meeting ends on Wednesday with a press briefing and updated economic forecasts from Chairman Ben Bernanke, whose comments will be in focus as investors try to assess when the Fed may start scaling back its $85 billion monthly bond purchases.

(Read More: Fed Meets as Faith in Its Bond Program Wanes)

An article by the Financial Times reported that Bernanke is likely to signal that the central bank is "close to tapering down" bond purchases. The news saw Wall Street shares briefly sell-off but markets eventually recovered as traders noted that the article did not contain much new information.

Nikkei Crosses 13,000

Early gains were spurred by news that world leaders at the Group of Eight (G-8) meeting in Northern Ireland continued to back Japan's stimulus efforts, which saw the yen weaken against the greenback for the first time in five sessions.

However, sentiment turned negative by midday as exporters like machinery maker NSK and chemicals manufacturer Tokuyama fell over 3 percent each.

Sony shares surged over 4 percent on news that activist investor Dan Loeb's Third Point has raised its stake in the consumer entertainment giant.

(Read More: Third Point Lifts Sony Stake, Urges Spin Off)

Australia Slips 0.2%

Minutes of the Reserve Bank of Australia's (RBA) June policy meeting provided no relief for Sydney investors. The central bank stated it was open to future interest rate cuts, but experts say the statement's calm tone disappointed investors who were hoping for a more aggressive stance.

"We expect the RBA to cut the official cash rate to 2.5 percent in July/August and to 2.25 percent in September/October and for the Australian dollar to fall to around $0.80 over the next few years," said Shane Oliver, head of investment strategy and chief economist at AMP Capital in a note.

Shares of agribusiness company Elders tanked 22 percent on news that it will be entering into a binding sale contract for the sale of its Futuris business.

Shanghai Flat

News that Central Huijin Investment, a unit of China's $500 billion sovereign wealth fund (CIC), scooped up shares in in the biggest commercial lenders to prop the equity market was unable to spur gains in financials. China's 'Big 4' lenders rose by less than one percent each.

(Read More: Charts Signal End for China Equity Downtrend)

Meanwhile, property developers gained after data showed home prices in May rose at the fastest pace this year. Poly Real Estate and China Vanke both rose 1 percent.

Kospi at 1,900

Blue-chip stocks which were sold-off in the previous session bounced back as investors went bargain hunting.

Market heavyweight Samsung Electronics rose 1.5 percent while LG Electronics rebounded 4 percent following the previous day's 3 percent slide. Hyundai Motor rallied 4 percent while Kia Motors rose 3 percent.

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