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Friday, 26 September 2014

Dollar stands tall, Asian shares end week on low note

 

A man looks at an electronic board displaying Japan's Nikkei average (top C) and the stock price indexes of various countries outside a brokerage in Tokyo September 4, 2014. REUTERS/Issei Kato

(Reuters) - Asian shares were poised to end the week on a sour note on Friday after a steep drop on Wall Street, while the dollar steadied close to multi-year highs.

European shares might escape some of the gloom, with financial spreadbetters predicting Britain's FTSE 100 .FTSE to open flat, Germany's DAX .GDAXI to open between 9 points lower and 9 points higher, and France's CAC 40 .FCHI to gain 4 to 5 points, on Friday.

"European equities are set to open flat, but as we've seen this week the opening sentiment has had little bearing on where markets have closed," Capital Spreads dealer Jonathan Sudaria said in a note to clients.

U.S. stocks ended sharply lower on Thursday as Apple Inc APPL.O broke under key technical levels after the tech giant withdrew an update to its new operating system. That pushed the S&P 500 .SPX to its biggest one-day decline since July.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.8 percent on Friday, on track for a weekly loss of around 2.7 percent.

Japan's Nikkei stock average .N225 lost 0.9 percent, shedding 0.6 percent for the week and pulling away from Thursday's seven-year closing high.

Data released before the market opened showed Japan's annual core consumer inflation eased in August, in another sign that the Bank of Japan could be forced into additional easing steps to meet its 2 percent inflation goal sometime next fiscal year.

But renewed hope for the Japanese government's pension reforms limited losses and also checked the yen's gain earlier in the session. Welfare Minister Yasuhisa Shiozaki denied media reports that suggested Tokyo would delay reforming its $1.26 trillion Government Pension Investment Fund. (GPIF)

The dollar is on track for its 11th successive weekly rise, something it has not achieved in four decades.

"At the moment, the economy with strong business sentiment is that of the United States... The dollar is becoming the destination of funds that are escaping stimulus elsewhere," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

The yield difference between 10-year U.S. Treasuries US10YT=RR and German Bunds DE10YT=RR reached its widest in nearly 15 years on Thursday, keeping pressure on the euro.

The European unit edged down about 0.1 percent on the day to $1.2743 EUR=, after falling as low as $1.26955 on trading platform EBS on Thursday, its lowest since November 2012.

The dollar erased early losses and was about 0.3 percent higher on the day against its Japanese counterpart at 109.07 yen JPY=, though still shy of a six-year peak of 109.46 climbed a week ago.

Brent crude LCOc1 was slightly up on the day at $97.01 a barrel, but set for its third weekly fall in four, as hefty supplies capped price gains and offset concerns that rising tensions in the Middle East could disrupt supply.

Spot gold XAU= added about 0.2 percent to $1,224.80 an ounce, after rebounding off Thursday's session low of $1,206.85 an ounce, which was its weakest level since Jan.2. It looked set to snap a three-week losing streak, though dollar strength kept it in danger of breaking below the key $1,200-an-ounce level.

Reference: Lisa Twaronite

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