WBC Westpac Banking Corp

Shares in Japan traded higher ahead of a Bank of Japan policy meeting later in the day, but most markets in the region were under pressure from a coming interest-rate decision from the U.S. Federal Reserve.

The Nikkei Stock Average was up 1.4% at 18211.54, while the S&P ASX 200 was down 0.3% and South Korea's Kospi slipped 0.1%.

The Malaysian ringgit and Korean won slipped slightly but the Australian dollar was up 0.3% against the U.S. dollar, its strongest since the beginning of the month.

"I think the markets are still very much on edge ahead of the Fed meeting," said Sean Callow, a currency strategist at Westpac Banking Corp. "There is some nervousness exported from China, when their markets came under pressure yesterday," he added.

The weakening of some markets comes after U.S. stocks slipped Monday, with many investors staying on the sidelines ahead of a Fed meeting that could end with the first rate-increase in nearly a decade. The two-day meeting begins on Wednesday U.S. time.

Asian currencies have gotten more volatile in recent weeks ahead of the meeting, said Mr. Callow. "The currency market seems to be paying more attention to equities" where trading has been rocky.

In Japan, analysts say investors have been extra cautious given that their central bank wraps up a meeting today. That could shed light on the potential for monetary stimulus further down the line, a positive for stocks which were down 14% from its late-June peak as of Monday's close.

While the Nikkei was higher early Monday, the bank isn't expected to make changes to its policy today. "If the [bank] went now, this month, they'd be criticized by a lot of people. There'd be a lot of blowback form the rank and file members of parliament," said CLSA's managing director of equity strategy, Christopher Wood.

In China, the Shanghai Composite closed down 2.7% Monday but fell more intraday, after the release of another batch of disappointing data from the world's second-largest economy. Two economic reports on Sunday—factory output and fixed-asset investment—fell short of expectations, adding to concerns that China could struggle to reach its full-year growth target of 7%.

Gregor Stuart Hunter, Chiara Albanese and Corrie Driebusch contributed to this article.

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

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(END) Dow Jones Newswires

September 14, 2015 21:35 ET (01:35 GMT)

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