Asian Stocks Waver As Policy Uncertainty, Weaker Oil Sap Confidence

Asian stocks wavered Thursday as investors grappled with the seemingly diminishing ability of major central banks to stimulate growth, while a tumble in crude oil inflamed already heightened risk aversion.

Global bond yields have risen in sympathy with depressed sentiment, adding to nervousness over when the Federal Reserve might decide to raise rates.

MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.1 percent.

Japan's Nikkei lost 0.6 percent and Australian stocks shed 0.1 percent. South Korea's Kospi was little changed.

The soggy Asian start followed an uninspiring performance overnight on Wall Street where the Dow lost 0.2 percent and the S&P 500 shed 0.1 percent, with uncertainty over future interest rate hikes and lower energy shares weighing.

While expectations over a Fed rate hike at next week's meeting have faded, investors have been bracing for a tightening before year-end.

Perceived limits to the extensive monetary easings led by major central banks like the European Central Bank and the Bank of Japan have also soured broader risk sentiment, driving global debt yields higher.

The Bank of England will be a focus on Thursday. The central bank is seen standing pat after easing policy last month, amid signs it overestimated the initial shock to Britain's economy from June's Brexit vote.

"Having just increased stimulus in August, the BoE won't be eager to add bond purchases or cut interest rates again," wrote Kathy Lien, managing director of FX Strategy at BK Asset Management.

"Recent data shows how their efforts have paid off so while the BoE will leave the door open to additional stimulus, they should note the improvements in the economy and signal to the market that they are in wait and see mode."

Sterling added to modest gains made overnight and was last up 0.2 percent at $1.3266.

Elsewhere, the dollar was little changed at 102.555 yen. It had briefly risen above 103.00 the previous day on speculation the BOJ would increase stimulus next week.

The euro was steady at $1.1246.

Brent crude limped up 0.5 percent to $46.07 a barrel after dropping 2.6 percent on Wednesday when data showing large weekly builds in U.S. petroleum products offset a surprise draw in crude stockpiles.

The 10-year U.S. Treasury note yield stood at 1.697 percent after sliding overnight to as low as 1.682 percent.

The 10-year yield fell as bond market weakness, which had sent it to a three-month high of 1.752 percent earlier this week, ebbed slightly.

Long-dated bonds have underperformed for much of the past month in line with a steepening yield curve in Japanese government bonds. The BOJ is studying options to steepen the yield curve to help prompt new lending by banks that have been hurt by low long-term rates.