Equities fell in Asian trade Wednesday as traders nervously awaited what is expected to be the biggest Federal Reserve interest rate hike in more than two decades.

With inflation showing little sign of easing from its 40-year highs, the US central bank has set itself on a hawkish course of tightening this year, sending shivers through world markets.

The prospect of higher borrowing costs has been compounded by a range of crises including the war in Ukraine, elevated oil prices and China's Covid lockdowns that have strangled crucial global supply chains.

The Fed now has to walk a fine line between getting control of surging prices and making sure it does not knock the recovery in the world's top economy off course.

"The Fed remains very focused on bringing inflation down, however, any further hawkish pivots will likely be tempered to some extent by the desire to achieve a soft landing," said Blerina Uruci at T. Rowe Price.

The Fed is expected to announce a 50 percentage point lift Wednesday -- its biggest since 2000 -- but boss Jerome Powell's post-meeting news conference will be closely watched for an idea about future hikes.

Speculation was swirling that 75 points could be on the table at some point this year.

"Powell will fall back to 'we are not on pre-set rate hikes' or something along those lines -- 'we go in with an open mind each meeting and will talk it over and we'll see where we go from there'," said Tony Farren, managing director at Mischler Financial Group.

"The market would take that as hawkish. For his comments to seem dovish, he'd have to shut down the talk of 75 basis points. And while I don't think he'll endorse it, I don't think he'll shut it down."

- Russian oil ban -

After a broadly positive lead from Wall Street, Asian markets struggled in holiday-thinned trade.

Hong Kong, Sydney, Seoul, Mumbai and Singapore slipped but Taipei and Manila rose while Wellington was flat.

Tokyo, Shanghai, Jakarta, Kuala Lumpur and Bangkok were closed.

London, Paris and Frankfurt rose in the opening minutes.

Oil prices rose after European Commission president Ursula von der Leyen on Wednesday said the European Union would impose a gradual Russian oil ban in retaliation for the war in Ukraine.

The news offset the expected hit to demand from China's coronavirus lockdowns, including in the country's biggest city Shanghai.

A huge release of crude from reserves by dozens of countries including the United States has also helped keep prices tempered.

Investors are waiting for a meeting Thursday of OPEC and other major producers including Russia, where they will discuss whether or not to lift output more than expected.

- Key figures at around 0720 GMT -

Hong Kong - Hang Seng Index: DOWN 1.2 percent at 20,856.96

London - FTSE 100: UP 0.1 percent at 7,565.78

Tokyo - Nikkei 225: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.0512 from $1.0519 on Tuesday

Pound/dollar: DOWN at $1.2486 from $1.2491

Euro/pound: UP at 84.18 pence from 84.17 pence

Dollar/yen: UP at 130.15 yen from 130.14 yen

West Texas Intermediate: UP 1.4 percent at $103.79 per barrel

Brent North Sea crude: UP 1.2 percent at $106.19 per barrel

New York - Dow: UP 0.2 percent at 33,128.79 (close)

dan/qan

T. ROWE PRICE GROUP

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