* Dollar index firmer, but down from near 3-year high
* MSCI Asia Pacific ex-Japan slips 0.2 percent
* Nikkei up slightly, hits 5-1/2-year high
By Masayuki Kitano and Vidya Ranganathan
SINGAPORE, May 21 (Reuters) - The U.S. dollar inched up
against major currencies but stayed well off highs on Tuesday as
investors cautiously traded expectations of whether Federal
Reserve Chairman Ben Bernanke will hint at a sooner than
expected reduction in bond-buying stimulus.
The U.S. dollar index, which measures the greenback's value
against a basket of currencies, edged up 0.1 percent to 83.797
, staying below a 3-year high, as suspense built up over
whether Bernanke might reveal the timing of any wind-down at his
appearance on Wednesday before the Congressional Joint Economic
A start to cutting the bond-buying programme beginning in
the northern summer was hinted at by San Francisco Fed President
John Williams last week - putting the issue firmly on the
economic committee's agenda.
Another member of the Fed's policy-setting panel, Chicago
Fed president Charles Evans, said on Monday the Fed could
continue full-speed ahead on its bond-buying program through the
summer, but end it abruptly in the autumn if by then it is
confident that the improvement in the jobs outlook is sustained.
Early expectations out of Europe were that concerns over the
Fed slowing its bond purchases would hurt European shares.
IG Markets predicted Britain's FTSE 100 to open 12
points or 0.2 percent lower; Germany's DAX to fall 15
points or 0.2 percent and France's CAC 40 to drop 0.4
Currency and stock markets were subdued across Asia,
although the Japan's Nikkei index managed to creep up to a fresh
The Nikkei share average slipped initially as a pause in the
yen's weakness spurred profit-taking, but bounced subsequently
to a 5-1/2 year intraday high as retail investors scooped up
underperforming shares. It was last up 0.1 percent on
"Institutional investors are actually rather quiet today. It
seems to be more retail-investor-driven today," said a senior
trader at a foreign bank.
On Monday, the dollar index had shed 0.6 percent,
retreating from Friday's high of 84.371, its strongest level
since July 2010.
MSCI's broadest index of Asia-Pacific shares outside Japan
eased 0.2 percent.
Australian shares slipped 0.6 percent on
profit-taking. In South Korea, the Korea Composite Stock Price
Index eased 0.1 percent to 1,980.27, inching away from a
closely-watched resistance level.
"The market atmosphere is pretty good, though it is still
facing psychological resistance near 2,000 points," said Kim
Young-june, a market analyst at SK Securities.
Against the yen, the dollar edged up 0.2 percent to 102.47
yen but remained below a 4-1/2-year high of 103.32 yen
set on Friday.
The yen's recovery in the previous session came after
economics minister Akira Amari suggested that the yen's strength
had been largely corrected.
On Tuesday, he clarified his remarks, telling reporters he
hopes the yen settles at a level that is in line with the
country's economic fundamentals and that the foreign exchange
market can find a balance between the yen's impact on imports
Spot gold fell 0.4 percent to $1,388.09. Gold drifted
lower on outflows from exchange-traded funds and as the dollar
firmed, putting pressure on bullion which has lost nearly a
fifth of its value this year.
Brent crude edged up 0.1 percent to $104.86 a
Global equity markets had mostly pushed higher on Monday,
driven up by a flurry of merger and acquisition activity, with
MSCI's all-country world equity index touching
its highest level since June 2008.
U.S. stocks ended little changed on Monday, but both the
U.S. benchmark S&P 500 index and the Dow briefly hit all-time