Asian stocks edged up Wednesday, poised to end a volatile month on a mildly stronger note, while the dollar struggled on heightened expectations that the U.S. Federal Reserve would do more to stimulate the economy.

Minutes of the Fed Open Markets Committee's early August meeting released Tuesday showed policymakers discussed a range of unusual tools they could use to help the economy, with some pressuring for bold new steps to shore up a flagging recovery.

This added to expectations that the Fed may spring into action at the next meeting in September.

The FOMC meeting minutes showed that Fed governors are becoming anxious, indicating a few members felt that recent developments justified a more substantial move, said Jessica Hoversen, fixed income and foreign exchange analyst at MF Global in note.

A rise in unemployment on Friday may push this faction of Fed officials over the edge, she said.

Asian stocks suffered a severe setback earlier in the month as a sovereign downgrade in the U.S., persistent debt problems in the euro zone and sharp downward revisions in global growth expectations roiled markets.

The MSCI index of Asian stocks outside Japan is down 9.8 percent so far this month and set for its worst monthly drop since May last year. The index is up 8.5 percent since the Aug. 9 low.

U.S. stocks posted modest gains as signs of the Fed willing to take aggressive steps helped offset the gloom from the slump in consumer confidence in the U.S., which hit a two-year low.

Those gains helped the MSCI Asia Pacific ex-Japan index rise 0.3 percent with benchmark indices in Hong Kong and South Korea up 0.4 percent and 0.7 percent respectively.

In Japan, the Nikkei was trading flat at 8,952.6 on profit-taking after four straight gaining sessions.

The index may stay in a narrow range below 9,000 until we have more catalysts for a U.S. economic recovery, said Fumiyuki Takahashi, managing director at Barclays Capital.

He added that domestic institutional investors such as pension funds are buying below 9,000, while foreign investors are hesitant to take positions ahead of U.S. non-manufacturing data from the Institute for Supply Management and U.S. jobs data later this week.

A Reuters poll showed economist forecast U.S. non-farm payrolls rising 80,000 in August with unemployment staying at 9.1 percent.

In currency markets, the euro fell across the board, particularly against commodity currencies, after lukewarm demand at an Italian bond auction threatened to push the euro zone's third biggest economy back to the center of the region's debt crisis.

The dollar faced problems of its own as the prospect of further monetary easing in the U.S. would further cement its status as a funding currency in carry trades.

The dollar index .DXY which measures the dollar's strength against a trade-weighted basket of currencies is down 6.3 percent this year and is poised to finish flat on the month.

Brent crude hovered at $114 a barrel on Wednesday after posting six days of gains on expectations the United States will act again to try to stimulate its economy and boost fuel demand.

Spot gold fell half a percent on Wednesday, pulling back from a 2.6 percent rally in the previous session.

(Reporting by Vikram Subhedar in Hong Kong and Ayai Tomisawa in Tokyo; Editing by Ramya Venugopal)