By Lisa Twaronite
TOKYO (Reuters) - Asian shares wavered on Tuesday, bolstered by record highs on Wall Street but hobbled by uncertainty as traders waited on a Federal Reserve meeting for clues on U.S. monetary policy.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> turned slightly higher after dipping into negative territory.
On Wall Street on Monday, the Dow Jones Industrial Average <.DJI> closed at a record high for the fifth straight session, and the S&P 500 <.SPX> marked its second straight closing record high, as higher U.S. Treasury yields helped lift financial shares. [.N]
At a two-day meeting beginning later on Tuesday, the Fed is expected to take another step toward policy normalization and announce plans to begin unwinding its $4.2 trillion portfolio of Treasuries and mortgage-backed securities.
The Fed is expected to hold interest rates steady, but investors will be looking for clues on the expected pace of further tightening later this year and next. The market is pricing in an approximately even chance of a hike in December.
Japan's Nikkei stock index <.N225> surged 1.2 percent in early trade, catching up to global equities gains and responding to a weaker yen as Tokyo markets reopened after a public holiday on Monday.
The Bank of Japan will also hold a regular policy meeting on Thursday, and is widely expected to maintain the status quo as inflation remains stubbornly weak despite a modest economic recovery.
Investors were also debating any potential market impact from a possible snap election.
Prime Minister Shinzo Abe is considering calling a poll for as early as next month to take advantage of his improved approval ratings and disarray in the main opposition party, according to government and ruling party sources.
"There has been concern among foreign investors, about the future of Abenomics and the Abe administration, with clear declines in Abe's approval ratings earlier this year," said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.
"If Abe is cemented in power for another few years, that would be a market-positive event," he said. "Certainty is preferred to uncertainty, when it comes to market confidence."
South Korean shares <.KS11> dipped 0.1 percent, against a backdrop of continuing tensions on the Korean peninsula.
U.S. Defense Secretary Jim Mattis hinted on Monday about the existence of military options on North Korea that might spare Seoul from a brutal counterattack but declined to say what kind of options he was talking about or whether they involved the use of lethal force.
The dollar index, which tracks the greenback against a basket of six major rivals, inched 0.1 percent lower to 91.946 <.DXY>. The euro was 0.1 percent higher at $1.1961 <EUR=>.
The dollar edged down 0.1 percent to 111.47 <JPY=> but remained not far from Monday's eight-week high of 111.66.
Crude oil prices were mixed, not far from last week's multimonth highs but seen lacking momentum as traders braced for a potential stockpile build-up expected later this week.
U.S. crude futures <CLc1> were up 0.1 percent at $49.98 per barrel, within sight of Thursday's nearly four-month high of $50.50. Brent crude <LCOc1> slipped 0.1 percent to $55.44, not far from an almost five-month high of $55.99 marked on Thursday.
(Editing by Kim Coghill)