By Marc Jones
LONDON (Reuters) - The dollar edged up, gold steadied and European shares held near five-year highs on Tuesday as investors look out for U.S. Federal Reserve signals on the future of its stimulus programme.
Upbeat comments from Chicago policymaker Charles Evans have made Wednesday's release of minutes of the U.S. central bank's last meeting and Fed chairman Ben Bernanke's testimony in Congress the same day the main focus for markets.
The usually dovish Evans said on Monday that as long as the recent pickup in the U.S. jobs market continued he was "open-minded" about slowing the Fed's $85 billion a month bond-buying programme, and he even mentioned the idea of simply halting it.
The dollar was up 0.25 percent against a basket of major currencies as mid-morning approached in Europe, although that was comfortably below its recent three-year high.
Economists expect Fed Chairman Bernanke to deliver a steady message on the bank's policy when he speaks to U.S. Congress. But any hint that it plans to wind in its support in the coming months could unsettle markets used to a steady drip of stimulus.
Having hit a five-year high on Monday, top European shares were 0.3 percent lower by 0815 GMT as investors took the pre-Fed uncertainty as a cue to cash in on some of the recent sharp gains.
"With the economic numbers being pretty good in the States, there may be an easing back of QE (quantitative easing bond-buying stimulus) sooner rather than later," said Berkeley Futures associate director Richard Griffiths.
"The DAX and Euro STOXX have moved ahead a lot more than the UK, so in the event of any profit-taking in the U.S., the European markets may drop just that little bit more."
It was a similar story in the bond market, where safe-haven German Bund futures lost ground. If the Fed does slow its bond-buying it will effectively be a tightening of monetary policy and thereby push up benchmark bond yields.
YEN, METALS YO-YO
Currency and stock markets across Asia were largely subdued, although Japan's Nikkei index managed to creep up to a fresh 5-1/2 year high and the yen gave back some of Monday's minor gains.
The yen's move came after Japan's economy minister said his comments the previous day that the government was now satisfied with the level of the currency had been misinterpreted.
"The Japanese yen story is still very much the same as it has been all along," said Societe Generale strategist Kit Juckes.
"Any correction in the dollar yen has been shallower than people who wanted big dips to make money out of could look for. And those who think it is a turn are being repeatedly thwarted."
After a recent rollercoaster ride in precious metals, gold steadied around $1,390 an ounce, although the stronger dollar left it facing its eighth fall in nine sessions. (GOL/)
But silver fell as much as 2.2 percent to trade near the 2-1/2-year lows hit during a 6 percent slide on Monday, when an unidentified investor sold off a large holding.
The metal has fallen out of favour with investors recently as declining demand from the photovoltaic solar energy sector and a growth in mine supply tarnish the outlook.
Spot silver XAG= was down around 1.2 percent at $22.65 an ounce. It hit a session low earlier of $22.41, not far off the 2-1/2 year low of $20.84 on Monday.
(Editing by Hugh Lawson)