Asian shares slipped on Wednesday after two sessions of solid gains, while oil prices swung higher as the market reconsidered the chances of a meaningful deal to restrict supply later in the year.

The mood was still skittish - when China set a slightly lower guidance rate for its yuan, the yen and safe-haven bonds got an instant boost. As investors realised this was not some message from Beijing on devaluation, the moves quickly reversed.

European shares are expected to extend their rally, however, with spreadbetters calling for a rise of 0.6 per cent in Britain's FTSE and gains of 0.5 per cent each in Germany's DAX and France's CAC 40.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.6 per cent, reversing early gains of 0.4 per cent, as its bear market rally petering out after a 3 percent rise over the previous two sessions.

The Shanghai Composite Index slid 0.3 per cent and South Korea 0.1 per cent. Japan's Nikkei fell 1.7 per cent, but is still up more than 5 per cent on the week.

"The rally itself has been extraordinary but very thin and the failure of the yen to continue on the fairly steady path of weakening we've seen in the past couple of days has been reflected as nervousness in the Nikkei," said Stefan Worrall, director of Japan equity sales at Credit Suisse.

"It's been a very volatile two weeks and nerves are still frayed despite the fact that we're off the bottom of those extreme sessions we saw last week."

E-Mini futures for the S&P 500 also slipped 0.1 per cent in Asia after Wall Street appeared to have broken its negative feedback loop with oil.

The Dow ended Tuesday with gains of 1.39 per cent, while the S&P 500 added 1.65 per cent and the Nasdaq 2.27 per cent.

A survey of global fund managers found they had become so cautious they were holding more cash than at any time since late 2001, an "unambiguous buy" signal according to Bank of America Merrill Lynch.

MOOD SWINGS

In commodity markets, oil was whipsawed after top exporters, Russia and Saudi Arabia, agreed to freeze output levels but said the deal was contingent on other producers joining in.

After falling sharply at first, prices recouped some ground early on Wednesday. Brent added 37 cents to $32.55, while US crude was up 20 cents at $29.24 a barrel.

"Albeit mostly symbolic, it is one of the first clear acknowledgements by the oil heavyweights that all is not entirely well in the current price environment," wrote Helima Croft, global head of commodity strategy at RBC Capital Markets.

"Additionally it signals a potential willingness to be more proactive later in the year. It puts the ball back in the court of those who would not or could not comply."

Fed minutes

Markets now await minutes of the Federal Reserve's last meeting to judge the balance of opinion among policymakers on the prospect of further rate hikes.

Boston Fed President Eric Rosengren certainly sounded in no hurry to tighten. Speaking late on Tuesday, Rosengren said the Fed would need to ratchet down economic forecasts it made in December because of the uncertain global outlook.

Doubts about the pace of any further hikes kept the U.S. dollar restrained at 96.720 against a basket of currencies. It slipped against the yen to 113.73 yen, though it has support around 113.60.

The euro also gained 0.2 per cent to $1.1165.

The big loser was sterling, which has struggled so far in 2016 because of worries the UK might leave the euro zone.

Traders said UK markets face a pivotal week ahead of a two-day summit starting on Thursday at which Prime Minister David Cameron will try to persuade other leaders to support a deal to keep Britain in the European Union.

Sterling was stuck at $1.4290, having shed 1 per cent against the dollar on Tuesday.

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