Tokyo stocks edge lower as yen rises after Fed meeting

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A man walks past an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo, Tuesday, March 14, 2017.

Global stocks drifted lower on Tuesday as investors looked to the Federal Reserve's policy meeting for an expected interest rate increase and hints on future hikes. Economists had forecast a 0.1 percent rise. The Dow Jones industrial average fell 0.1 percent, to 20,934.55.

Britain's FTSE 100 shed 0.1 percent to 7,358 while France's CAC 40 fell 0.6 percent to 4,968. Australia's S&P/ASX 200 added 0.2 percent to 5,799.60 and India's Sensex was up 0.3 percent at 29,683.29. Hong Kong's Hang Seng declined 35.10 points or 0.15 percent to end at 23,792.85. The Shanghai Composite Index added 0.1 percent to 3,239.33.

Global markets were mixed Friday as investors awaited a meeting of finance and economic ministers of the Group of 20 industrial countries.

China's central bank raised short-term interest rates following the US rate increase.

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RATES FACTOR: The Fed is hoping to lift rates gradually off their record lows, where they stayed for seven years following the 2008 financial crisis. With strong economic reports in recent weeks, expectations that the Fed may stand pat this month have changed.

ANALYST'S VIEWPOINT: "On the one hand, the market ponders a surprise hold, in which massive unwinding of positions could take place with the hike already priced in", said Jingyi Pan, a market strategist at IG in Singapore.

Risk sentiment was dampened with analysts widely expecting the base interest rate to be raised by half a percent, pushing it to a range of 1% to 1.25%. The dollar edged up but was unable to hold above the 115-yen mark breached briefly last week, while the euro benefitted from speculation the European Central Bank could start tightening monetary policy as the region's economy shows signs of improvement. The U.K. government meanwhile could formally begin the process of exiting the European Union.

"The progressive improvement in both labour market conditions and lift in inflation rates in the USA certainly validates the Fed's move this week", said Jingyi Pan, market analyst at IG in Singapore.