Caution reigned on financial markets today ahead of an expected decision by the US Federal Reserve to raise interest rates.
The Fed is widely expected to raise interest rates by 25 basis points - the sixth straight rise - to 2.5 per cent.
Markets are also generally expecting the central bank to repeat language in its statement about keeping hikes at a measured pace.
Despite this, some analysts are warning that the Fed may have to become more aggressive - if not necessarily today - in order to combat the various imbalances that are seen plaguing the US economy. These include a lack of savings, growing inflation and large deficits.
Speakers at a finance conference in London this week talked of US rates rising above 4 per cent over the year.
Mr Paul Mortimer-Lee, head of market economics at BNP Paribas in London said the Fed may be forced to surprise markets in order to force through domestic demand restraint.
Earlier, Tokyo's Nikkei hit a two-week closing high. It was up 0.2 per cent to 11,407.14, its highest close since January 18 th.
The dollar drifted lower against the euro and the yen. The euro was up a quarter of a per cent from the US close at $1.3071, after hitting 6-day highs of $1.3095 earlier.
