* Asian shares slip, Europe up on oil
* Dollar firms ahead of Fed
* UK investors focus on Osborne budget
By Jamie McGeever
LONDON, March 16 (Reuters) - Shares were mixed and the
dollar rose on Wednesday as markets awaited the outcome of the
U.S. Federal Reserve's policy meeting, seen leaving interest
rates on hold but the door open for further increases later in
the year.
Investors have welcomed the easing of the intense volatility
that swept through financial markets in the first two months of
the year, but are aware that calmer conditions mean the Fed
might be more inclined to resume its policy tightening soon.
That supported the dollar, which gained most ground against
the yen after Bank of Japan governor Haruhiko Kuroda said the
central bank had room to slash interest rates to around -0.5
percent from -0.1 percent at present.
European shares bucked the trend in Asia, rising in early
trade thanks to a recovery in oil prices following two days of
losses that had culminated in a decline of around 5 percent.
In Britain, investors were eyeing a budget presentation
during which finance minister George Osborne is expected to cut
public spending and warn that the domestic economy will not
escape the global economic turbulence unscathed.
"Given that stocks have been trading near multi-week highs,
more prudent players in the markets pared back some of their
recent exposure ahead of the conclusion to today's Federal
Reserve rate meeting," said Michael Hewson, chief markets
strategist at CMC Markets.
"Having said that, today's oil rebound has led to a slightly
higher open this morning in Europe."
In early European trade, the FTSEuroFirst 300 index of
leading shares was up 0.4 percent at 1,346 points .FTEU3 .
Germany's DAX was 0.7 percent higher, France's CAC 40 up 0.5
percent .FCHI and Britain's FTSE 100 gained 0.4 percent
.FTSE .
Oil prices managed a bounce after data from industry group
the American Petroleum Institute (API) showed U.S. crude
stockpiles rose by less than half what analysts had expected.
U.S. crude CLc1 gained 1.7 percent to $36.96 a barrel,
while Brent LCOc1 rose 1.3 percent to $39.27, lifting
resources stocks. Shares in BP BP.L were up 2 percent.
In Asian trading, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS edged down 0.1 percent, and
Japan's Nikkei .N225 took a knock from an initial rise in the
yen and fell 0.8 percent.
MSCI's global share index was last down 0.1 percent, while
U.S. futures pointed to a slender rise of 0.1 percent at the
open on Wall Street ESc1 .
LOSING THE (DOT) PLOT
While no rate move is expected at the Fed's meeting it does
include updates of members' economic projections and a news
conference with Chair Janet Yellen, events that have caused
violent market reactions in the past.
Hurting sentiment on Tuesday were downward revisions to
retail sales that left consumer spending looking a lot softer.
One result was that the Atlanta Fed "GDPNow" measure of economic
growth dropped to 1.9 percent for the first quarter from 2.2
percent.
On the other hand, financial market volatility has subsided
in recent weeks. The Fed had pointed to this uncertainty as one
reason behind its decision in January not to follow the previous
month's historic rate hike with another rise.
This highlights the tough balancing act the Federal Open
Market Committee (FOMC) must perform at its meeting.
Analysts generally assume Fed projections for interest rates
-- widely known as the "dots" -- will indicate only three hikes
are likely this year instead of four. Yet the market is pricing
in just one move of 25 basis points for 2016.
"We do not expect that the Fed will raise rates today.
Instead, we may see a consensus forming for a next rate hike in
June," analysts at Rabobank said in a note on Wednesday.
"Meanwhile the FOMC's dot plot still includes an expectation
of four rate increases this year, which seems excessive. We may
therefore see the FOMC bring down the number of rate hikes
predicted in the dot plot to three."
The dollar was up a quarter of 1 percent against a basket of
currencies .DXY and had reversed an earlier slip against the
yen to trade 0.4 percent higher at 113.65 yen JPY= . The euro
slipped 0.2 percent back below $1.11 EUR= .
Sterling was also down a little against the dollar at
$1.4120 GBP= before the budget, in which Osborne will try to
get his austerity drive, and his own political ambitions, on
track without upsetting voters before June's EU referendum.
Shanghai CSI 300 and global effects interactive https://t.co/YqIYLIbInP
Chinese A-shares vs developed and emerging stocks http://link.reuters.com/rac25w
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(Editing by Catherine Evans)