Portugal Colonial - Stocks higher, dollar lower before Fed rate call

Oil prices rallied on lingering fears that the Israel-Hamas war could turn into a wider conflict in the crude-rich Middle East.

The Fed was widely expected to keep borrowing costs on hold in an announcement late Wednesday, with observers saying there was growing optimism that it had run its course after more than a year of rate hikes that have helped cool elevated inflation.

"The Fed is done, not just for this meeting, but for the cycle and the next move will be a rate cut," said Saxo Asia Pacific's Charu Chanana.

Despite confidence that the Fed would hold rates steady, investors were skittish.

"At the start of today’s session, caution was the name of the game," said Fawad Razaqzada, market analyst at City Index and FOREX.com.

Wall Street opened with small gains, with the Dow edging 0.1 percent higher, after all three main indices rose for a second straight session Tuesday.

European shares were higher in afternoon trading, having spent some time in the red.

Asia's main stock markets mostly ended higher after the positive close on Wall Street on Tuesday.

Tokyo rallied more than two percent after the Bank of Japan (BoJ) stopped short of fully tweaking its monetary policy on Tuesday, even as it hiked inflation expectations.

Officials announced a minor change to its yield curve control programme, which allows bonds to rise and fall within a certain band, though there had been talk it would widen that band.

The news battered the yen, and on Wednesday it continued to fall, hitting 151.72 per dollar, its weakest level since touching a 32-year-low 151.95 in October last year and spurring an intervention.

The yen later recovered somewhat, having also struck a 15-year low against the euro.

The yen has tumbled in 2023 against its major peers as the BoJ refuses to budge from its ultra-loose policy, even as the Fed and other key central banks pushed interest rates to multi-decade highs to combat inflation.

But it picked up in early Asian trade after currency official Masato Kanda said Tokyo was ready to move if needed to step into forex markets.

"We're on standby," he told reporters. "But I can't say what we'll do, and when -- we'll make judgements overall, and we're making judgements in a state of urgency."

- Key figures around 1330 GMT -

New York - Dow: UP 0.1 percent at 33,097.37 points

London - FTSE 100: UP 0.8 percent at 7,378.04

Frankfurt - DAX: UP 0.7 percent at 14,915.80

Paris - CAC 40: UP 0.9 percent at 6,944.39

EURO STOXX 50: UP 0.8 percent at 4,094.20

Tokyo - Nikkei 225: UP 2.4 percent at 31,601.65 (close)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 17,101.78 (close)

Shanghai - Composite: UP 0.1 percent at 3,023.08 (close)

Dollar/yen: DOWN at 151.34 yen from 151.68 yen on Tuesday

Euro/dollar: DOWN at $1.0528 from $1.0576

Pound/dollar: DOWN at $1.2106 from $1.2142

Euro/pound: DOWN at 86.96 pence from 87.08 pence

Brent North Sea crude: UP 2.5 percent at $87.11 per barrel

West Texas Intermediate: UP 2.8 percent at $83.25 per barrel

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G.Teles--PC