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Nikkei Markets

Asian stocks advance on bets US Fed may pare rate hike projections

Tencent and China Construction Bank among gainers

HONG KONG (Nikkei Markets) -- Asian shares rose Tuesday amid expectations that the U.S. Federal Reserve will maintain a dovish tone on interest rates.

The Nikkei Asia300 Index of companies outside Japan climbed 0.2% to 1,332.11, adding to the 1% advance in the previous session. Hong Kong-listed heavyweight Tencent Holdings gained 0.3% to record a third successive session of advances. The company is due to report earnings later this week.

The gains in the A300 Index came after positive Wall Street cues. The S&P 500 Index on Monday rose for the fifth time in the last six sessions amid bets that the Fed's current policy stance will keep prices of risk assets supported.

Following the conclusion of the two-day meeting on Wednesday, the Fed is expected to cut its interest rate projections for the current year to one from the two forecast at the December meeting.

The Fed shifted to a more accommodative stance at the January meeting amid muted inflation and concerns over world economic outlook. The central bank had said that in light of recent global economic and financial developments and muted inflation pressures, it "will be patient" in relation to any future rate adjustments.

Further, the Fed on Wednesday may formally announce a halt to its balance sheet unwinding after minutes of the January meeting indicated that almost all policymakers thought that it would be desirable to announce a plan to stop reducing the Fed's asset holdings.

"We expect the Fed to keep the federal funds rate target range at 2.25-2.50%, and continue to stress 'patience' when determining its next move," Morgan Stanley said in a note. "The Fed is on extended hold and should revise forecasts downward for growth and the median path for rates at its March meeting."

Among key movers, Taiwan Semiconductor Manufacturing Co. slipped 0.2%. Hong Kong shares of China Construction Bank rose 0.3%.

China Literature, backed by Tencent, jumped 8.3% following a 63.7% surge in 2018 profit.

China Telecom climbed 1.6%. The company on Tuesday reported a 13.9% rise in net profit in 2018, aided by higher revenue from information and application services and Internet services segments.

Chinese baby diaper maker Hengan International Group fell 2.3% after saying its net profit for 2018 edged up by 0.2%.

Larsen & Toubro declined 1.6%. The Indian engineering and construction company on late Monday said it will acquire a 20.3% stake in information technology company Mindtree from its single largest shareholder, V.G. Siddhartha, for about 33 billion rupees ($480 million). Shares of Mindtree closed 2% lower.

--Nimesh Vora

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