Stocks edge up amid Fed lull, oil slips

Asia shares inched up on Tuesday while oil fell for a second session as investors awaited clues on whether the Federal Reserve will raise U.S. interest rates this year.

European equities markets also looked set for a modest start, with Eurostoxx 50 futures ahead by 0.4 percent. EMini futures for the S&P 500 were flat.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.3 percent in slow trade. South Korea, Australia and Shanghai all gained.

Japan's Nikkei went the other way and eased 0.6 percent as the yen ground higher on the dollar.

A survey of Japanese manufacturing activity showed signs of steadying in August as output rose for the first time in six months, but the improvement was marginal and had little impact on stocks.

The IHS Markit/Nikkei Japan Flash PMI rose to 49.6 in August from a final 49.3 in July. More flash surveys are due from Europe and the United States later in the day.

The whole world seems to have hushed ahead of comments from Fed Chair Janet Yellen at the central bank's annual meeting in Jackson Hole on Friday. Investors still doubt the stars will align for a hike anytime soon, so a hawkish tone from Yellen would challenge that equanimity.

"Ever so slowly, the market does seem to be reluctantly acknowledging the chorus of senior Fed speakers who have suggested recently that a 2016 rate hike is still quite probable and September is 'live'," wrote analysts at ANZ in a note.

"But in reality, the response has been very muted."

Indeed, U.S. Treasuries actually rallied on Monday, with 10-year yields at 1.54 percent after falling 4 basis points overnight.

Fed fund futures imply around a 24 percent chance of an easing in September, rising to around 50 percent by December. A quarter-point hike is not fully priced in until September 2017.

OIL GIVES GROUND

In commodity markets, oil remained under pressure after shedding 3 percent on Monday.

Prices retreated from two-month highs on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count.

Brent crude lost 40 cents to $48.76 a barrel. It hit a two-month high of $51.22 on Friday. U.S. crude futures fell 49 cents to $46.92, after the September contract expired on Monday at $47.05.

On Wall Street, the Dow had ended Monday down 0.12 percent, while the S&P 500 lost 0.06 percent and the Nasdaq added 0.12 percent.

Biotech stocks received a boost from Pfizer's $14 billion acquisition of cancer drug maker Medivation, which jumped nearly 20 percent.

Of the 479 companies in the S&P 500 that have reported earnings, 71 percent have topped expectations, according to Thomson Reuters data. Earnings are currently showing a decline of 2.3 percent for the quarter.

In forex markets, the dollar slipped 0.15 percent to 94.381 against a basket of currencies. The index fell about 1.3 percent last week on what traders perceived as mixed signals from Fed officials.

The dollar drifted as low as 100.03 yen in early trade and spent much of the session hovering just above that psychological bulwark. The euro was a shade firmer at $1.1336.

The New Zealand dollar blipped higher after the country's central bank forecast another 35 basis points in possible rate cuts, less than many investors had wagered on.

The kiwi dollar rose around half a cent to $0.7323 in reaction.