Asian stocks were subdued early on Tuesday as financial markets braced for the possibility of Greece defaulting on its debt, while a two-day policy meeting of the US Federal Reserve’s monetary committee starting later in the session also counselled caution.

Global equity markets have felt a pinch after talks between Athens an its creditors broke down over the week-end, with Greece only having two weeks before it has to repay €1.6 billion to the International Monetary Fund. Sentiment soured further on Monday as both sides hardened their stance.

MSCI’s broadest index of Asia-Pacific shares outside Japan stood unchanged. Japan’s Nikkei lost 0.3 per cent, while Australian shares were little changed.

“The macro duo of the FOMC and Greece continue to create jitters — it will be a daily theme for the next month; in the case of the Fed, the next three to four months,’’ Evan Lucas, market strategist at IG in Melbourne, wrote.

FOMC meet

The two-day Federal Open Market Committee (FOMC) meeting begins later in the session and the focus was on whether the US central bank offers a hint of an interest rate rise later in the year.

In currencies, the euro took a more sanguine view on the ongoing Greek debt saga and with the looming Fed meeting possibly providing a potential surprise or two for the dollar.

Euro vs dollar

The common currency steadied after erasing losses overnight as the shock of failed talks between Greece and its creditors on Sunday faded for the moment. The euro was little changed at $1.1278, having pulled back from an overnight low of $1.1189.

The dollar treaded water at 123.415 yen, stuck in a tight 123.82-123.123.10 range over the past three trading days.

Crude oil struggled to gain traction after falling overnight on the Greek debt concerns. US crude nudged up 0.1 per cent to $59.57 a barrel after shedding 0.7 per cent on Monday.

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