* Shares up in Europe, Asia before Fed rate decision
* Fed expectations soothe Brexit-jangled nerves
* Sterling rises, safe-haven yen and Swiss franc dip
* Irish yield premium over German highest in nearly a year
By Nigel Stephenson
LONDON, June 15 (Reuters) - European shares rose and
sterling gained against the dollar and yen on Wednesday as
expectations the U.S. Federal Reserve will not raise interest
rates any time soon soothed investors on edge over whether
Britain will vote to leave the European Union.
U.S. shares, which have not been immune to Brexit fears, are
likely to open higher, according to index futures ESc1
1YMc2 .
Worries that Britain, the world's fifth-largest economy,
could quit the EU after June's 23 referendum have dominated
markets this week and driven investors towards safe-haven assets
such as gold and the Swiss franc.
Several recent opinion polls have put the "Leave" campaign
ahead, though bookmakers' odds still favour a vote to remain.
But with the Fed seen certain to keep rates on hold later in
the day and many in markets seeing only an outside chance of a
hike this year, investors on Wednesday showed a greater appetite
for risk, with the yen and the Swiss franc taking a back seat.
"It's a minor turnaround to the negative sentiment of the
last few days, but there is a bit more risk appetite across the
board, with the Fed's likely position lending a bit of support,"
said Hantec Markets' analyst Richard Perry.
Sterling gained ground for the first time in a week and was
last up 0.5 percent at $1.4185, having hit a two-month low of
$1.4091 on Tuesday. The pound rose 0.3 percent to 150.71 yen.
The dollar strengthened 0.1 percent to 106.20 yen JPY= ,
having fallen as far as 105.63 yen on Tuesday. The euro EUR=
rose 0.2 percent to $1.1228 and 0.2 percent to 1.0815 Swiss
francs.
Britain's blue-chip FTSE 100 .FTSE share index rose nearly
1 percent, nonetheless underperforming the pan-European
FTSEurofirst 300 index .FTEU3 , which was up 1.2 percent,
breaking a five-day Brexit-induced losing streak.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS eked out slight gains, though Japan's Nikkei
stocks index .N225 added 0.4 percent.
Chinese stocks took in their stride the fact that MSCI again
declined to admit Chinese domestic shares to its main emerging
markets index. The blue-chip CSI 300 index .CSI300 rose 1.3
percent.
However, analysts and traders cautioned that the break from
the intense focus on Brexit may be only be brief.
Economists have warned that Britain leaving the EU's single
market would not only hit British assets but could even trigger
a European recession.
Ireland, Britain's near neighbour and a major trading
partner, felt the impact of Brexit fears as the differential
between Irish IE10YT=TWEB and German 10-year government bond
yields hit its widest in nearly a year at 0.88 percent.
"Ireland in the last few days has been the clear
underperformer as markets penalise the country's strong trade
links with the UK," ING rates strategist Martin van Vliet said.
German 10-year bonds, deemed one of the world's safest
assets, yielded 1.3 basis points, having turned negative on
Tuesday for the first time, falling as low as minus 0.3 bps.
Japanese 10-year government bond yields hit the latest in a
series of record lows at minus 0.17 percent, with traders
blaming Brexit fears.
The Bank of Japan unveils its latest policy decision on
Thursday and is widely expected to keep rates unchanged.
Oil prices fell, with international benchmark Brent crude
LCOc1 , dropping for a fifth consecutive day. It last traded at
$49.08 a barrel, down 75 cents.
Gold XAU= dipped 0.6 percent to $1,278 an ounce, having
touched its highest since May 6 at $1,289.80 on Tuesday.