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Traders still debating odds of 50 bps or 25 bps Fed cut

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Robust U.S. retail sales briefly tipped scale toward 25

bps

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Dollar drops vs yen, but 2-year Treasury yields tick up

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Most Asian stocks weak, while Nikkei tracks yen gyrations

By Kevin Buckland

TOKYO, Sept 18 (Reuters) - The dollar ceded some of its

overnight gains on Wednesday while Asian stocks put in a mixed

display as traders weighed the odds of a super-sized Federal

Reserve interest rate cut later in the day.

The U.S. currency dropped back sharply against the yen,

handing back a third of its rally from Tuesday, when

unexpectedly robust U.S. retail sales data was taken as

weakening the case for aggressive Fed easing.

The euro also advanced, clawing back almost all of the

previous day's decline.

The chances of the Fed kicking off its easing cycle with a

super-sized cut of 50 basis points (bps) oscillated in Asia,

retreating to 63% early in the day from 67% around the same time

on Tuesday, according to LSEG data. However, as of 0137 GMT, the

odds were back at 65%.

Japanese shares were alone in posting strong gains in the

region, with the Nikkei stock average climbing 0.72% to

erased Tuesday's 1% slide, as the benchmark index continued to

be influenced by the dollar-yen exchange rate.

Mainland Chinese blue chips opened flat after

coming back online following a holiday-extended weekend, and

Taiwan also returned from a day off to trade 0.35%

weaker. Australia's benchmark was little changed.

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

slipped 0.05%.

Hong Kong and South Korea were among major markets closed

for holidays.

Wall Street finished nearly unchanged on Tuesday, failing to

sustain early momentum that pushed the S&P 500 and Dow to record

intraday highs. S&P 500 futures pointed 0.08% higher on

Wednesday.

"The (U.S.) price action conveys the significant inflection

point markets confront," said Kyle Rodda, senior financial

market analyst at Capital.com.

"If the Fed nails it at this meeting, the bull market could

charge on. If it doesn't, then it could signal a high water mark

in this cycle."

The dollar dropped 0.55% to 141.60 yen, although

that followed a 1.26% surge overnight.

The euro added 0.12% to $1.1128.

The dollar index eased 0.07% to 100.84, after a 0.3%

rally on Tuesday.

Short-term Treasury yields continued to rise

though, with that on the two-year note adding another basis

point to stand at 3.6028% in Asian time.

Gold found its feet, rising 0.15% to $2,573.18 per

ounce after slipping back from an all-time high in the previous

session.

Crude oil was steady after gaining about $1 a barrel on

Wednesday amid escalating tensions around the Middle East.

Militant group Hezbollah vowed retaliation against Israel

after pagers detonated across Lebanon on Tuesday, killing at

least eight people and wounding nearly 3,000 others.

Meanwhile, the UN's Libya mission said factions did not

reach a final agreement in talks aimed at resolving the central

bank crisis, which has slashed oil output and exports.

U.S. crude futures eased 13 cents to $71.06 in the

latest session, and Brent crude futures edged down 14

cents to $73.56.