By Tom Westbrook

SINGAPORE (Reuters) – Asian stock markets made a cautious start on Wednesday and the dollar held firm amid lingering nerves about the fallout from a looming failure at developer China Evergrande and anticipation the Federal Reserve may move a step closer to tapering.

A 0.5% drop was recorded. The first opening of the equity, bond, and currency markets for China was Wednesday. This is the first open since Evergrande’s troubles triggered widespread selling and contagion fears around the world.

Singapore-traded China futures are about 2% below Friday’s closing level. The yen, U.S. Treasuries and other safe-haven assets rose slightly in morning trading.

Markets have cooled globally after Monday’s sharp selloff. Analysts have minimized concerns that Evergrande’s problems could become a Lehman moment and trigger a financial crisis. However, stocks are not showing any signs of recovery and commodities continue to be under severe pressure.

Overnight on Wall Street the fell 0.1% to sit a little more than 4% below a record peak it made early in the month. ()

fell 0.4% in early Asia trade and the was under pressure near a one-month low at 6.4850 per dollar. The Hong Kong markets will be closed on holiday.

In a note to clients Rabobank analysts stated, “The” Evergrande crisis is further fueling concerns over China’s widening crackdown. The new rules on everything, from developers’ debt levels to online gaming, were also highlighted by Rabobank.

Evergrande may be seen as not just a possible crisis trigger but as an indicator of broader policy shifts that could threaten Chinese growth in a world where politics and economics dominate.

Bloomberg reports that Evergrande missed its Monday interest payment due to at least two large bank creditors. On Thursday, Evergrande is scheduled to make $83.5 million payment in interest to bonds. If the bondholders fail to repay within 30 days the bonds will be in default.

Already, the firm’s troubles have spread to developers and an index of Chinese high-yield corporate debt (mainly issued by property companies) has collapsed. Investors are hoping for a response from Beijing, and hope that the global downturn can be contained.

The dollar was bid on currency markets as traders feared that Beijing might surprise the markets and bring forward its 2023-2022 hike projections.

It traded at $1.1722 to the euro, and purchased 109.13 Japanese yen. [FRX/]

It also kept the heavily-shorted Australian dollar near a one-month low at $0.7229, while the was under pressure after a central bank official dampened expectations of a big rate hike at next month’s meeting.

The was slightly lower at 1.3209%. [US/]

The majority of analysts believe the Fed will avoid revealing details on its tapering plan – keeping that information for November. But, board members may be more concerned about their “dot chart” rate projections.

Tapas Strickland, director of economics and market at National Australia Bank (OTC) said that even though no tapering announcement was expected, “the dot plot could deliver a surprise for Powell and force him to be dovish in the press conference.”

At 1800 GMT, the Fed will announce its decision. A news conference is held half an hour later.

In commodities, hovered near a month low and oil prices found support from a relaxation of inbound travel rules, likely to boost airline fuel demand. [MET/L][O/R]

futures were last up 0.4% at $74.64 a barrel and rose 0.4% to $70.75. The support for gold was $1,774 an troy ounce. [GOL/]