SINGAPORE (Dow Jones)--Asian markets ended mixed Tuesday as investors awaited details of an additional monetary easing program expected from the U.S. Federal Reserve this week, while Sydney shares edged higher after Australia's central bank surprised markets with an interest rate increase. Australia's S&P/ASX 200, Japan's Nikkei Stock Average and Hong Kong's Hang Seng Index all ended 0.1% higher. South Korea's Kospi added 0.2% and China's Shanghai Composite Index shed 0.3%. India's Sensex ended down 0.1% after the Reserve Bank of India increased interest rates as expected. Dow Jones Industrial Average futures climbed 22 points in screen trade. Trading volumes were modest as investors were generally reluctant to buy into stocks ahead of the Fed's policy meeting on Tuesday and Wednesday. To recharge an anemic U.S. economy, the Fed is widely expected to unveil a second round of quantitative easing, informally referred to as QE2, but question marks remain on the size and scope of any fresh stimulus. Markets were also keeping a watch on U.S. midterm elections Tuesday, which are expected to see some large gains by Republicans in the U.S. House of Representatives. "It's all about QE2," said Nick Burmester, an institutional trader at MF Global in Sydney. "Everyone's getting bearish on the size of it, but markets are still priced for close to $1 trillion. We can't see a lot of upside in a big number, because it's in the price." Sydney shares edged higher, amid strength in the financial sector, after the Reserve Bank of Australia raised its cash rate by a quarter-point to 4.75%, helping to trigger a rally in the Australian dollar and other risk-sensitive currencies such as the euro. The Australian dollar, which achieved parity against the U.S. dollar in the wake of the rate increase, was more recently at 99.78 U.S. cents from 98.88 cents prior to the RBA move. Commonwealth Bank of Australia shares climbed 1.8%, leading the sector's rise, as Australia's biggest mortgage lender boosted its standard variable mortgage rate by nearly twice as much as the rise in the official cash rate. Westpac shares rose 1.1% amid expectations it would also lift rates. Westfield Group Australia tacked on 1.9% before going into a trading halt pending an announcement. The Australian newspaper reported that Westfield will unveil a A$3.5 billion equity raising and a split of its Australian retail assets into a separate company. Indian shares ended a tad lower after the Reserve Bank of India raised interest rates for the sixth time this year, taking its policy lending rate a quarter-point higher to 6.25%, as widely expected. Property stocks tumbled after the central bank also unexpectedly tightened lending rules for real-estate asset purchases. DLF fell 3.3%, Unitech shed 3.3% and Indiabulls dropped 5.0%. In Tokyo, some exporters advanced after taking big losses recently, with Toyota Motor rising 1.1% and Canon adding 0.6%. But investors remained cautious ahead of the Fed and U.S. election outcomes and also a national holiday in Japan on Wednesday. Honda Motor fell 2.3%, extending Monday's 5.0% fall, after cutting its second half net profit outlook due to the strong yen. "A rebound in the dollar against the yen would trigger a recovery in the Nikkei, but to be honest, it's completely unclear" how currency markets will react after the Fed's prospective second round of easing, said Naoteru Teraoka, general manager at Chuo Mitsui Asset Management. In Hong Kong, China Construction Bank was among the day's biggest blue-chip gainers, after the Beijing-based lender unveiled plans to raise up to CNY61.62 billion in a rights issue in Hong Kong and Shanghai. The amount was lower than the CNY75 billion it earlier said it hoped to raise. The bank's Hong Kong shares added 2.2%, while its Shanghai-listed ones rose a more modest 0.8%. Chinese stocks declined as investors took profits in some resource sector shares after strong gains recently. In Shanghai, Jiangxi Copper's shares fell 1.6% and Zijin Mining Group lost 0.6%. South Korean shares closed higher, led by automakers and heavy-industry shares on hopes for a stronger business outlook due to the recovering economy, but traders remained cautious ahead of the Fed outcome. Hyundai Motor rose 1.7%, extending Monday's 6.2% rise, and Hanjin Heavy Industries jumped 9.3%. Technology stocks were mostly lower as recent earnings reports raised concerns about their near-term outlook amid still-weak global consumer demand. Samsung Electronics slipped 0.9% and Hynix Semiconductor was off 3.5%. "The market's consensus on the size of the Fed's measures has been lowered, to around $500 billion. The market will cheer if the result comes in above that expectation, but if it is below that, some shocks (for stocks) are expected," said Daishin Securities' Park Jung-seop in South Korea. Among other markets, New Zealand's NZX-50 rose 0.8%, Philippine stocks gained 1.7%, Singapore's Straits Times Index gained 0.4%, Indonesian shares fell 0.5%, Thailand's SET Index added 0.2%, Malaysia's KLCI shed 0.2%, and Taiwan's Taiex slipped 0.4%. In foreign-exchange markets, the euro rose along with the Australian dollar after the RBA's surprise move. "The decision obviously took the market by surprise especially following last week's slightly softer (Australian) inflation data," said Credit Agricole Corporate and Investment Bank in a note to clients. "High terms of trade and modest spare capacity will contribute to the need for further tightening further down the line and we look for further hikes, with at least another" 0.25 percentage point move in the first quarter of 2011, the note said. The euro was fetching $1.3965 from $1.3885 late Monday in New York, and Y112.81 from Y111.91. The dollar was at Y80.75, from Y80.60. Lead Japanese government bond futures were down 0.05 at 143.03 points, while the 10-year cash JGB yield was down 0.5 basis point at 0.940%. Spot gold was at $1,356.70 per troy ounce, up $5.40 from its New York close Monday. December Nymex crude-oil futures were up 54 cents at $83.49 per barrel on Globex. -Dow Jones Newswires; +65-6415-4140; markettalk@dowjones.com

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