By Ian Chua

SYDNEY (Reuters) - Japanese stocks started trade on Wednesday with a spring in their step thanks to a positive lead from Wall Street and a softer yen, but the rest of Asia was restrained as investors waited for clarity on the Federal Reserve‘s next policy step.

Major currencies were subdued as well ahead of the outcome of the Fed‘s policy meeting due at 1800 GMT and Chairman Ben Bernanke‘s media briefing half an hour later.

MSCI’s broadest index of Asia-Pacific shares outside Japan was a touch softer, while Tokyo’s Nikkei average rallied 2.0 percent to a one-week high.

This followed a 0.8 percent rise in the U.S. S&P 500 index and a 0.9 percent increase in the Nasdaq Composite index.

“Speculation about the Fed’s decision is still keeping investors on the sidelines, so volume may be low. But Wall Street’s optimistic stance on the Fed outcome is serving as a tailwind to Japanese stocks,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.

Investors are hoping that Bernanke will soothe market jitters about a possible scaling back of the bank’s $85 billion monthly bond-purchase programme.

The quantitative easing policy had helped fuel a global rally in stock markets and recent talk of a pullback in stimulus has knocked major indexes off their highs.

Indeed, the MSCI index has dropped about 8 percent since May 22 when Bernanke told Congress that a decision to dial down its bond-buying programme could come in the “next few meetings” if the economy maintained its momentum.

Emerging markets, commodity currencies and U.S. Treasuries were among the hardest hit as investors rushed to take profits in a reaction that many analysts have described as overblown.

“We expect the chairman to highlight that tapering is not necessarily tightening, but instead is a slowing in the pace of accommodation,” said Michael Gapen, analyst at Barclays Capital.

“Whether the chairman succeeds in convincing markets that tapering is conditional on incoming data, as opposed to a foregone conclusion, and that a willingness to taper should be separated from the remaining components of the exit strategy remains an open question.”

Evan Lucas, a market strategist at IG in Sydney, expects markets will go into a bargain-hunting mode if the Fed gave a completely clear picture of where policy is heading.

With the Fed outcome looming, currency investors retreated to the sidelines. That saw the dollar just a touch firmer against a basket of major currencies.

Against the yen, the dollar drifted up 0.2 percent to 95.49, while the euro was also 0.2 percent higher at 127.94.

The euro bought $1.3394, having reached a four-month peak of $1.3416 overnight.

Commodities were also marking time with U.S. crude flat at $98.43 per barrel and copper at $7,005 per tonne.

Gold was steadier at $1,369 an ounce, following a 1.2 percent slide on Tuesday amid uncertainty about the Fed outcome.

(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Eric Meijer)