* Dollar index up from previous day's lows
* San Francisco Fed's Williams says Fed may end QE this year
* MSCI Asia Pacific ex-Japan steady, Japan's Nikkei slips
By Masayuki Kitano
SINGAPORE, May 17 (Reuters) - Japanese shares slipped and
Asian equities were broadly steady on Friday after a U.S.
Federal Reserve official said the central bank may begin to
taper its asset buying this summer, lending support to the
U.S. equities sagged on Thursday after John Williams,
president of the Federal Reserve Bank of San Francisco, said the
Fed could begin easing back on the monetary gas pedal this
summer and end bond buying late this year.
Although Williams does not have a vote in the Fed's
policy-setting panel this year, his comments spooked investors,
since the Fed's purchases of $85 billion a month in bonds has
been significant driver of the rally in equities that has taken
U.S. stock indexes to record highs this year.
The dollar gained on Williams's comments. Against a basket
of currencies, the dollar index last stood at 83.766, up
from Thursday's low of 83.448 and holding within sight of a
10-month peak of 84.094 set earlier this week.
"At the previous policy meeting, the Fed essentially said
whether it will reduce or expand its bond buying is 50-50. But
markets are now suspicious that Bernanke may signal it's
something like 55-45 when he testifies in the congress on May
22," said Minori Uchida, chief FX analyst at the Bank of
Tokyo-Mitsubishi UFJ in Tokyo.
Federal Reserve Chairman Ben Bernanke is due to testify on
the economy before the congressional Joint Economic Committee on
In equities, Japan's benchmark Nikkei share average eased
0.2 percent, after opening down 0.7 percent as Japanese
shares ran into some profit-taking after their recent rally.
The initial retreat in Tokyo shares came even as Japanese
core machinery orders surged a much bigger-than-expected 14.2
percent in March. Taking some of the shine off that data, which
is known for being volatile, was the fact that core machinery
orders were expected to fall 1.5 percent in April-June
"The forecasts for April-June underlined companies'
cautiousness about capital spending due to uncertainty over the
global economic outlook, including weak data from China and
patchy indicators from the United States," said Shuichi Obata,
senior economist for Nomura Securities in Tokyo.
MSCI's broadest index of Asia-Pacific shares outside Japan
was little changed at 480.79, and down from last
week's peak of 491.17, its highest level since July 2011.
U.S. crude futures slipped to about $95 a barrel
after disappointing U.S. economic data revived worries over
demand in the world's biggest oil consumer.
Factory activity contracted in the mid-Atlantic region in
May, ground-breaking for new homes tumbled in April and new
claims for jobless benefits spiked last week, according to three
Coupled with soft underlying inflation, the data suggested
weak demand as the U.S. economy entered the second quarter.
Markets in Hong Kong and South Korea are closed on Friday