* Cyprus rejects bailout terms; last minute deal hopes still
* MSCI Asia ex-Japan share index hits 2013 low before
* Hong Kong stocks outperform, led by a rally in China
* Fed meeting outcome also in focus
* Japanese markets closed for holiday
By Ian Chua
SYDNEY, March 20 (Reuters) - Share markets across most of
Asia and the euro struggled on Wednesday after a bailout plan
for Cyprus fell into disarray, but losses were limited as
investors clung to hopes that a last minute deal will be
Cyprus's parliament overwhelmingly rejected a proposed tax
on bank deposits as a condition for aid, pushing the
Mediterranean island a step closer to the brink of financial
But the European Central Bank (ECB) offered some comfort by
saying it was committed to providing liquidity within certain
limits, even after having threatened to end emergency lending
assistance for teetering Cypriot banks.
"It is relatively calm for now, but headline risks remain
acute," said Sue Trinh, strategist at RBC in Hong Kong.
"Clearly the 'no' vote was not an ideal situation. The
government now has to scramble for last minute options and it
remains uncertain how exactly it will unfold."
The finance minister of Cyprus is in Moscow to scout for
support amid speculation Russia could step up, while newly
elected President Nicos Anastasiades is due to meet party
leaders on Wednesday to explore a way forward.
The MSCI's broadest index of Asia-Pacific shares outside
Japan eased 0.2 percent, having earlier carved
out a fresh 2013 trough. The index is now around 3 percent lower
from this year's peak set a month ago.
Among the biggest losers, South Korea's KOSPI fell
1.0 percent, Australia's S&P/ASX 200 index shed 0.4
percent and Taiwan's TAIEX lost 0.5 percent. India's BSE
index was down 0.4 percent.
Bucking the region's weakness, Hong Kong stocks
bounced off a three-month low thanks to a rally in Chinese
shares as more clarity about recently announced
property curbs at home eased investor uncertainty.
Japanese financial markets were shut for a holiday.
The lacklustre performance in Asia mirrored Wall Street, and
was unlikely to inspire European bourses.
Jonathan Sudaria, a dealer at Capital Spreads in London,
suspects European equity markets will open flat with traders
preferring to sit on the sidelines for now.
"Markets are set to open in a state of stasis as traders
wait for a raft of news releases to be announced before deciding
on the next leg higher or lower," he said in a note.
Commodity markets were also calmer with Brent crude
recovering from a three-month low and copper off a
seven-month trough. Spot gold, meanwhile, held near a
Uncertainty surrounding Cyprus kept the euro pinned near
four-month lows against the U.S. dollar. The euro fetched
$1.2876, having fallen as far as $1.2844 overnight.
The common currency lost ground against the yen as well,
shedding 0.2 percent to 122.39, near a two-week low
of 121.45 plumbed Monday.
Yen bulls, however, will be wary of any comments from
Haruhiko Kuroda, who becomes governor of the Bank of Japan on
Expectations that Kuroda will quickly embark on a much more
aggressive monetary policy to fight deflation have recently
pushed the yen to multi-year lows versus the euro and dollar.
The dollar index, which tracks the greenback's
performance against a basket of currencies, was flat at 82.979
hovering not far from a seven-month peak of 83.166 set a few
Investors will also keep an eye on the outcome of the
Federal Reserve's two-day policy meeting due to end later on
Analysts expect the Fed to keep buying $85 billion a month
in mortgage and Treasury bonds to encourage investment and
bolster a weak economic recovery.
"Overall, we expect the Fed to maintain its stance on asset
purchases and forward guidance. At the press conference, we
expect the chairman to continue to downplay the costs of asset
purchases while highlighting the benefits," analysts at Barclays
Capital wrote in a client note.
"With the Fed having shifted to unemployment rate-based
guidance, the chairman's views on the overall labour market
conditions, which take into account a broader set of indicators,
would be parsed."