Markets are largely not expecting the Fed to increase interest rates at the current meeting and are instead waiting for the Fed's accompanying statement, expected at 1815 GMT, for clues on future rate moves.

The latest Reuters poll has indicated that all 29 primary dealers of US Treasury Securities said they expect the Fed to leave short-term interest rates unchanged at its June meeting.

The poll also found, however, that 26 dealers think the Fed has at least one more 0.25 percentage point hike up its sleeve when it convenes on August 22.Tokyo shifts to Tankan watch in Tokyo, the market remained jittery about the Fed meeting, traders said attention was beginning to shift to next Tuesday's quarterly ``Tankan'' survey of business confidence by the bank of Japan (boj).

The benchmark Nikkei closed up 91.11 points or 0.53 per cent at 17,370.17 after rising as high as 17,421.07.

The stock market shrugged off news that international rating agency Fitch IBCA may finish by Wednesday reviewing Japan's sovereign debt rating for possible downgrade.

``National risk has little to do with private businesses unless the currency or interest rates move drastically,'' said a fund manager at a Japanese asset management company.

Hong Kong, one-stock market
Trade in Hong Kong was centered on benchmark stock China Telecom, but overall volume was low at HK 5.940 billion as market players marked time ahead of Fed meeting's end.

Some market watchers said they weren't sure they would return to the market once FOMC's decision on interest rates was confirmed.

``It's hard to say what the market will do on the fomc decision,'' said Jerry Pang, Institutional Sales Manager at HSBC Securities, adding that the market's interest was in what Fed Chairman Alan Greenspan would have to say about the US economy and whether he warned of more interest rate rises to come.

The Hang Seng was bolstered by gains in China Telecom, soon to change its name to China Mobile (Hong Kong) Ltd. The stock jumped 4.36 per cent to HK $71.75 on follow-through buying on news it was talking to its parent about acquiring seven mobile phone networks in China.

The Hang Seng index gained 1.61 per cent or 260.61 points to 16,416.38, after dipping to 16,132.53 at one stage.

``it's a one stock market at the moment,'' said David Williamson, Sales Director at China Everbright Securities.

Taiwan investors anxiously sidelined
Fed caution added to the woes of the Taiwan market, already buffeted by Taiwan-China tensions, volatility on Wall Street and lending irregularities involving some local financial institutions.

``Although the Fed is widely expected to keep US interest rate unchanged, Taiwan's investors are still worried,'' said George Hou, Vice President of Jardine Fleming.

``As the index has dropped below the 365-day moving average, investors tend to react anxiously towards the Fed's interest rate meeting,'' Hou said.

Taiwan stocks slipped for the fourth straight session with investors watching anxiously from the sidelines as the index dropped below the 365-day moving average of 8,435 points. The benchmark Taiex closed at 8,365.3, down 58.54 points, or 0.69 per cent, from 8,424.17 on Tuesday.

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