European stock index futures fell Wednesday as investors looked to book some of the previous session's gains and waited for the end of a Federal Reserve policy meeting expected to announce further steps to stimulate the U.S. economy.

The euro was steady after regaining ground lost following a surprise ratings downgrade for Italy and the dollar fell close to a record low against the yen, pressured by strong selling by Japanese exporters that triggered traders' stop-losses.

The Fed is expected to announce at 2:15 a.m. ET plans to rebalance its portfolio in favor of longer-dated bonds and so push long-term interest rates -- already near historic lows -- even lower in a move known as Operation Twist.

Euro STOXX 50 index futures fell 0.8 percent, despite modest gains on Asian exchanges. Futures for Germany's DAX and France's CAC-40 also fell, while financial spreadbetters in London called the FTSE 100 <.FTSE> to open down as much as 0.5 percent.

Gold climbed above $1,800 an ounce, up about 0.3 percent on the day, supported by its safe haven allure amid fears that the euro zone's sovereign debt problems could trigger a new banking crisis.

The market will be glued to Europe. The question is whether Europe is going to have a safety net ready for banks, Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities in Tokyo, told Reuters. If Spanish and Italian bonds fall further, banks could suffer massive losses.

Asian markets had mostly opened weaker for the third time this week, but later reversed course.

Markets fluctuate so much during the day these days it's very hard to pick a trend, said David Spry, analyst at F.W. Holst in Melbourne. Anyone who thinks the market's just going to recover quickly is going to be misplaced.

BARGAIN HUNTING

Japan's Nikkei share average <.N225> closed up 0.2 percent, with some bargain-hunting supporting the market. Analysts said market falls of recent weeks had made valuations attractive, with two-thirds of Tokyo stocks now trading below their book value -- the net asset value of the entire company.

MSCI's broadest index of Asia Pacific shares excluding Japan <.MIAPJ0000PUS> gained 0.4 percent. The index remains about 21 percent below its 2011 high in April.

Asian markets have underperformed U.S. equities -- which struck their low for the year after a steep global sell-off in early August -- with the MSCI index for Asia returning to plumb a new 14-month low last week.

What is very interesting is that since Aug. 9, the S&P futures are up something like 11 percent since the low and over that period the MSCI Asia Pacific ex-Japan is actually flat, Mohammed Apabhai, head of Asia Pacific trading strategies at Citi, told Reuters Insider TV in Hong Kong.

And we think one of the reasons why that is happening is not only because the dollar has been a bit stronger, but also because Asian clients in general don't really understand or follow very closely what is going on in Europe, and in that environment they are just de-risking, he said.

So if the risk comes back on again, there is a potential of a benchmark chase which will probably be more accentuated in Asia than in other parts of the world.

S&P 500 index futures traded in Asia rose 0.3 percent, pointing to a slightly firmer start on Wall Street after stocks drifted marginally lower on Tuesday, when European shares <.STOXX50E> had risen around 2 percent.

BELEAGUERED EURO

European debt worries were tempered, to some extent, after Greece promised further cuts to its public sector before a second conference call with international lenders that Athens must persuade to give it more loans to avoid bankruptcy next month.

That relief helped the beleaguered euro recover following a downgrade of Italy's credit rating. The euro traded around $1.37, up more than a cent from a low of $1.3591 on Tuesday.

(The euro) was a bit oversold and there was a paring in those positions. No one wants to be over-committed ahead of the FOMC (Fed meeting), said Rob Ryan, foreign exchange and interest rate strategist at BNP Paribas in Singapore.

The dollar dipped to as low as about 76.11 yen at one point on trading platform EBS, nearing a post-World War Two record low of 75.941 yen hit in August, before recovering to around 76.35 yen.

Against a basket of major currencies <.DXY>, the dollar was flat.

Oil was little changed, with Brent crude futures flat at $110.52 a barrel and U.S. crude easing 0.3 percent to $86.69. Copper rose 0.6 percent to $8,358 a metric ton.

(Additional reporting by Masayuki Kitano in Singapore, Lisa Twaronite and Antoni Slodkowski in Tokyo, Miranda Maxwell in Melbourne and Reuters Insider TV in Hong Kong; Editing by Richard Borsuk)