AKIPRESS.COM - Japanese stocks scaled seven-year highs on Wednesday, putting the rest of Asia in the shade, amid expectations that Prime Minister Shinzo Abe will postpone a planned sales tax hike to avoid damaging a fragile economic recovery, reports Reuters.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 percent, after U.S. indexes ended a holiday-thinned session flat, and financial spreadbetters expected the uninspired mood would carry over into Europe.

Britain's FTSE 100 .FTSE and France's CAC 40 .FCHI were expected to open down 0.1 percent and Germany's DAX .GDAXI was seen down 0.2 percent, with the banking sector in focus after global regulators fined five major banks for failings in currency trading.

The regulators imposed penalties totaling $3.4 billion on UBS (UBSN.VX), Citigroup (C.N), HSBC (HSBA.L), Royal Bank of Scotland (RBS.L) and JP Morgan (JPM.N).

The Shanghai Composite Index .SSEC added 1 percent in volatile trading, building on its surge this week after the announcement of a tie-up that will give global investors easier access to China's $3.9 trillion stock market beginning from next Monday.

Japan's Nikkei .N225 stole the spotlight for most of the session, jumping to a fresh seven-year high after local media said that Abe will postpone a planned tax increase and call a general election for December in an effort to lock in his grip on power before his voter ratings slide further. The Nikkei pared gains and ended up 0.4 percent.

The yen, which has remained under pressure for nearly two years due to the BOJ's aggressive stimulus spending, gained against the greenback, which traded at 115.37 yen, down about 0.4 percent on the day after marking a seven-year high of 116.11 yen on Tuesday.

Some suggested the yen could come under renewed pressure if Abe were to call an election and emerge victorious. The euro traded at $1.2484, up about 0.1 percent on the day and edging away from a two-year low of $1.2358 hit on Friday. The dollar index .DXY was steady at 87.504, not far from last Friday's high of 88.190 - a peak not visited since June 2010.

In commodities markets, crude oil continued to drop amid fears of a supply glut, with Brent LCOc1 shedding about 0.9 percent to $80.93 a barrel. U.S. crude CLc1 fell 0.9 to $77.25. Spot gold added about 0.2 percent to $1,166.90 an ounce, though the dollar's recent strength weighed on its upside.