By Dominic Lau
TOKYO, Oct 10 (Reuters) - The dollar pulled further awayfrom an eight-month low on Thursday on hopes of a break in theU.S. fiscal standoff, with President Barack Obama meetingRepublican and Democrat lawmakers to discuss the governmentshutdown and raising the borrowing limit.
Asian shares were also expected to get some relief, whileU.S. Standard & Poor's 500 E-mini futures added 0.3percent, indicating a firmer open on Wall Street on Thursdayafter the S&P 500 index edged up 0.1 percent overnight.
House Democrats will journey to the White House later onWednesday, and House Republican leaders will make the visit onThursday as the search intensifies for a way to break theimpasse that has worried markets and sparked warnings about thepotential for economic havoc.
Some Republicans and Democrats also floated the possibilityof a short-term increase in the debt limit to allow time forbroader negotiations on the budget.
Financial markets have been optimistic that a deal betweenthe two sides would be reached by the Oct. 17 deadline to avoidan historic U.S. debt default.
But strains in short-term interest rates and funding marketsincreased as the date drew ever closer, keeping investors onedge.
"We think a resolution to the debt ceiling impasse inincreasingly likely to be a last minute affair, and marketanxiety seems likely to build up as we head into next week. Weexpect to see dollar/yen test lower in the days ahead," analystsat BNP Paribas wrote in a note.
The dollar held steady at 97.465 yen after gaining0.5 percent in the previous session, its best one-day percentagerise in two weeks. It hit a five-week low against the Japanesecurrency on Tuesday.
The minutes of the Federal Reserve's September meetingrevealing the decision not to reduce its $85 billion a monthbond-buying programme was a "close call" also helped buoy theU.S. currency.
"This is consistent with our expectations that the Fed willtaper purchases at the upcoming December meeting. That said, theongoing federal government shutdown and upcoming expiration ofthe debt ceiling suggests that the decision to taper could bepushed into 2014," Barclays Capital said in a note.
"A sooner resolution to the fiscal risks that cloud theoutlook could keep December on the table, but a longer stalematecould dampen growth sufficiently and lead to a tapering in thefirst quarter of 2014 or later," it added.
Against a basket of major currencies, the dollar climbed further away from an eight-month low.
As the dollar regained some of its footing, gold dipped 0.1 percent to around $1,305.7 an ounce, adding toWednesday's 0.9 percent decline.
U.S. crude prices eased 0.2 percent to about $101.5 abarrel, extending a 1.9 percent tumble in the previous sessionas the largest weekly buildup of U.S. stocks in a year weighedfurther on a market already concerned that Washington's budgetstandoff would curb demand in the world's biggest oil consumer.
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