Portugal Colonial - Asian markets enjoy much-needed rally as Fed's big day arrives

After weeks of uncertainty, the US central bank will finally deliver its views on the state of the world's top economy and how officials plan to tackle inflation that is now at a four-decade high without knocking its recovery off course.

Minutes from its December gathering pointed to a more hawkish tilt, with plans to speed up the taper of its vast bond-buying programme, the selling of the assets it already has and three or four rate increases before the end of the year.

While boss Jerome Powell pledged any tightening would be carefully calibrated, the prospect of higher borrowing costs has rattled markets across the world with most key indexes deep in the red from the start of the year, with Wall Street particularly hard hit.

His comments after the meeting will be pored over for signs of the Fed's plans, which most commentators believe include a first hike in March.

Analysts were leaning positive ahead of the meeting.

Frances Stacy, at Optimal Capital, told Bloomberg Television that Powell would try to take a less hawkish tone, saying policy would be guided by data while supply chains were improving and inflation showed signs of peaking.

"I think what that's going to do is potentially reassure markets that the Fed put is ready, willing and able," she said, referring to the bank's past in backstopping markets. "That could cause some serious enthusiasm and a short squeeze."

And Standard Chartered Bank's Steven Englander concurred, adding that "a moderately hawkish Powell would be dovish in market terms".

Meanwhile, markets strategist Louis Navellier saw three rate hikes this year and that after the recent bout of selling across markets, buying opportunities were emerging.

"I'm very comfortable that we are going to have a bottom here soon. Remember, the market is a manic crowd," he said in a note.

After a second day of high volatility in New York, Asia enjoyed a little more calm in the morning.

Hong Kong, Shanghai, Singapore, Seoul, Wellington, Taipei and Jakarta all rose, though Tokyo and Manila edged down.

However, while there remains some optimism among analysts about the outlook, the International Monetary Fund on Tuesday lowered its growth outlook for the global economy saying it has started the year "in a weaker position than previously expected".

It said Omicron threatened to set back the recovery as countries impose containment measures, while other issues remained, including inflation and geopolitical tensions.

Included in those tensions is the standoff on the Ukraine-Russia border, with Moscow building up troop numbers and the West led by the United States warning the risk of an invasion "remains imminent".

US President Joe Biden said such a move would prompt "enormous consequences" and even "change the world", adding that he would consider imposing direct sanctions on Russian counterpart Vladimir Putin on top of a raft of measures being drawn up.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: DOWN 0.4 percent at 27,024.08 (break)

Hong Kong - Hang Seng Index: UP 0.8 percent at 24,439.17

Shanghai - Composite: UP 0.5 percent at 3,449.11

Euro/dollar: UP at $1.1309 from $1.1305 late Tuesday

Pound/dollar: UP at $1.3517 from $1.3507

Euro/pound: DOWN at 83.64 pence from 83.66 pence

Dollar/yen: DOWN at 113.84 yen from 113.87 yen

West Texas Intermediate: DOWN 0.3 percent at $85.36 per barrel

Brent North Sea crude: DOWN 0.1 percent at $88.16 per barrel

New York - Dow: DOWN 0.2 percent at 34,297.73 (close)

London - FTSE 100: UP 1.0 percent at 7,371.46 (close)

J.Oliveira--PC