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Asian stocks stutter after Wall Street falls sharply

overnight

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Worries over tariffs, trade and geopolitics dent sentiment

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Euro near five-month high after Germany passes debt

overhaul

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Yen slightly weaker ahead of BOJ policy decision

By Ankur Banerjee

SINGAPORE, March 19 (Reuters) - Asian stocks were

subdued on Wednesday and gold hovered near record highs as

economic worries and a shifting geopolitical landscape kept risk

appetite in check, while the yen was a tad softer ahead of the

Bank of Japan's policy decision.

The euro remained close to the five-month high it

reached on Tuesday after Germany's parliament approved plans for

a significant increase in spending, handing conservative leader

and the chancellor-in-waiting Friedrich Merz a huge boost.

Geopolitical tensions escalated as Israeli airstrikes

pounded Gaza and killed more than 400 people on Tuesday,

shattering nearly two months of relative calm since a ceasefire

began, unnerving investors.

Adding to the unease, Russian President Vladimir Putin

agreed to temporarily stop attacking Ukrainian energy facilities

but refrained from endorsing a full 30-day ceasefire.

"While Russia-Ukraine ceasefire talks are ongoing, most feel

that we're no closer to anything truly tangible and a lasting

agreement," said Chris Weston, head of research at Pepperstone.

That left investor sentiment fragile and market moves muted,

with MSCI's broadest index of Asia-Pacific shares outside Japan

down 0.12%. Japan's Nikkei was 0.5%

higher on a weak yen.

The focus in Asian hours will also be on Indonesian stocks

after the stock market there clocked its sharpest fall

in nearly three years on Tuesday, on concerns over the

government's fiscal strategy and the nation's growth prospects.

U.S. stocks fell sharply on Tuesday as investors exercised

caution ahead of a monetary policy decision from the Federal

Reserve, while gauging the potential impact of President Donald

Trump's tariff policies.

Thomas Poullaouec, head of multi-asset solutions for APAC at

T. Rowe Price, said on-and-off tariff threats have upended

markets trying to weigh the impact on growth and inflation.

"Prolonged uncertainty will begin to have real impacts on

policymaker, corporate and consumer behaviour leaving us more

cautious near term, and watching for opportunities amid expected

higher volatility."

FED AND BOJ

All eyes during Asian hours will be on the BOJ. The central

bank is widely expected to stand pat on rates as policymakers

spend more time assessing how prospects of higher U.S. tariffs

would affect the export-reliant economy.

Markets are focusing on Governor Kazuo Ueda's post-meeting

briefing for clues on how soon the central bank could next raise

rates, a decision complicated by the contrast between benign

domestic data and uncertainty caused by Trump's trade policy.

"The underlying macro backdrop - activity and prices - is

likely to unfold in a manner consistent with the BOJ's forecast.

As such we expect the BOJ to hike two more times this year by 25

basis points each in May and October," ANZ strategists said in a

note.

Rising odds of the Japanese central bank raising interest

rates this year have helped push the yen higher, gaining 5%

against the dollar so far this year.

The yen was last at 149.58 per dollar, slightly

weaker on the day but close to the five-month high touched last

week.

The dollar index, which measures the U.S. currency

against six rivals, was steady at 103.34, hovering near the

five-month low it touched in the previous session.

Investor attention later in the day will switch to the Fed.

The U.S. central bank is expected to hold interest rates steady,

with the focus on the new economic projections from policymakers

as well as comments from Fed Chair Jerome Powell.

"The Fed, just like the market, desperately needs some

visibility on trade, tariffs and overall policies, and we expect

Powell to avoid ifs and buts and instead continue to advocate

for a data-dependent approach," said Julien Lafargue, chief

market strategist at Barclays Private Bank and Wealth

Management.

Traders are pricing in 58 basis points of easing this year

from the Fed, with the first cut fully priced in for July, LSEG

data showed.

In commodities, Brent crude futures eased 0.24% to

$70.39 a barrel, while U.S. West Texas Intermediate crude

slipped 0.2% to $66.75 in early trading.

Gold prices eased to $3,029 per ounce, just below the record

high touched on Tuesday as geopolitical jitters led to

safe-haven flows.

(Editing by Jacqueline Wong)