• Nikkei surges as Tokyo markets reopen after Monday holiday
• Fed seen announcing plans to unwind debt portfolio
• Crude futures diverge but stick close to recent highs

TOKYO: Asian shares slipped on Tuesday, supported by record highs on Wall Street but hobbled by uncertainty as traders awaited a Federal Reserve meeting for clues on US monetary policy.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent after wobbling between positive and negative territory for much of the morning.

On Wall Street on Monday, the Dow Jones Industrial Average closed at a record high for the fifth straight session, and the S&P 500 marked its second straight closing record high, as higher US Treasury yields helped lift financial shares.

At a two-day meeting beginning later on Tuesday, the Fed is expected to take another step toward policy normalization and announce plans to begin unwinding its $4.2 trillion portfolio of Treasuries and mortgage-backed securities.

The Fed is expected to hold interest rates steady, with investors looking for clues on its anticipated pace of further tightening later this year and next. The market is pricing in an approximately even chance of a hike in December. "If the Fed does keep the option for December alive, and reaffirms its view in terms of gradual rate increases, that may be dollar-supportive, given the more benign rate-hike path priced by the market," said Mitul Kotecha, head of Asia macro strategy for Barclays in Singapore.

"This is likely to give the dollar support going into the end of this week," he said.

"So we might see Asian currencies fail to make any significant gains, and they may even be on the back foot, if we do see the dollar resume more upside," Kotecha added.

Japan's Nikkei stock index surged 1.5 percent, catching up to global equities gains and responding to a weaker yen as Tokyo markets reopened after a public holiday on Monday.

On Thursday, the Bank of Japan will also hold a regular policy meeting, and is widely expected to maintain the status quo as inflation remains stubbornly weak despite a modest economic recovery.

Investors were also debating any potential market impact from a possible snap election.

Prime Minister Shinzo Abe is considering calling a poll for as early as next month to take advantage of his improved approval ratings and disarray in the main opposition party, according to government and ruling party sources.

"There has been concern among foreign investors, about the future of Abenomics and the Abe administration, with clear declines in Abe's approval ratings earlier this year," said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.

"If Abe is cemented in power for another few years, that would be a market-positive event," he said. "Certainty is preferred to uncertainty, when it comes to market confidence."

South Korean shares dipped 0.1 percent, against a backdrop of caution ahead of the Fed meeting as well as continuing tensions on the Korean peninsula.

US Defense Secretary Jim Mattis hinted on Monday about the existence of military options on North Korea that might spare Seoul from a brutal counterattack. But he declined to say what kind of options he was talking about or whether they involved the use of lethal force.

The dollar index, which tracks the greenback against a basket of six major rivals, inched 0.1 percent lower to 91.935 . The euro was 0.1 percent higher at $1.1970.

The dollar was nearly flat on the day against its Japanese counterpart at 111.59 but remained not far from Monday's eight-week high of 111.66.

Higher US yields bolstered the greenback, with the benchmark 10-year note yield notching a one-month high of 2.237 percent overnight.

Crude oil prices were mixed, not far from last week's multimonth highs but seen lacking momentum as traders braced for a potential stockpile build-up expected later this week.

US crude futures were steady at $49.91 per barrel, within sight of Thursday's nearly four-month high of $50.50. Brent crude slipped 0.1 percent to $55.41, not far from an almost five-month high of $55.99 marked on Thursday.