Markets in Asia slipped from their highest levels in two months, as investors stayed cautious at the start of the U.S. Federal Reserve's two-day policy meeting.

The Japan's Nikkei Stock Average fell 0.2%, South Korea's Kospi was down 0.4% and Australia's S&P/ASX 200 was flat.

Investors tend to avoid riskier investments before Fed meetings, said Andrew Sullivan, managing director of sales and trading at Haitong Securities. The market is "lurching from meeting to meeting just in case there's a change" in the central bank's position on when it will raise interest rates.

The U.S. central bank is widely expected to leave benchmark interest rates unchanged near zero, although its statement from the meeting, due Wednesday in the U.S., could provide investors clues about the path of monetary policy.

The release of earnings as well as large initial public offerings in Hong Kong and Japan, are lightening volumes in the region, added Mr. Sullivan. "The risk is that if anything happens, low volumes will squeeze the market."

In Japan, for example, Japan Post Holdings Co. priced its initial public offering Monday at the top of its proposed range, amid strong demand from investors for high-dividend stocks. The government will raise about 693 billion yen ($5.71 billion) from selling 11% of its shares outstanding.

In Hong Kong, China International Capital Corp. started to take orders from institutional investors for its up to $811 million initial public offering Monday, in what would be one of the major offerings in Asia in the fourth quarter.

The MSCI Asia Pacific Index closed Monday at its highest level since Aug. 19 and is on track for its best month since 2009, with a month-to-date gain of 10%. Shares mostly rallied in anticipation of more easing measures by Chinese authorities, announced last week, as well as the prospect of easing by the European Central Bank and Bank of Japan.

U.S. stocks mostly fell overnight Monday as oil prices slumped.

On Tuesday, the energy sector on the S&P ASX 200 was off 1.4%. Santos Ltd. and Woodside Petroleum Ltd. were each down more than 1.5%.

Investors also are looking to Japan's central bank meeting at the end of the week, and investors are speculating it may increase its stimulus package. Robin Brooks, an analyst at Goldman Sachs, is forecasting "substantial" easing by the central bank.

Brent crude oil prices were last down 0.2% at $47.46 a barrel in Asia trade.

Gold was down 0.2% at $1,163.70 a troy ounce.

Write to Chao Deng at Chao.Deng@wsj.com

 

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(END) Dow Jones Newswires

October 26, 2015 21:45 ET (01:45 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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