Asian shares get lift from Wall St, dollar steadies

TOKYO (Reuters): Asian shares edged higher on Friday following gains on Wall Street while the dollar steadied, but gains were capped by uncertainty over whether the Federal Reserve will raise interest rates next week.

European stocks were seen following suit, with the pan-European FTSEurofirst 300 index of top-European shares set for its biggest weekly gain since July.

Financial spreadbetters expected Britain’s FTSE 100 to open 0.5% higher, Germany’s DAX to open up by as much as 0.8%, and France’s CAC 40 to open up 0.9%.

US stock futures rose 0.3%, suggesting a slightly firmer opening on Wall Street later in the session.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up about 0.2%, below its session highs but still on track to rise more than 3% for the week.

Chinese shares erased earlier gains, with the CSI300 index and Shanghai Composite Index down 0.9% and 0.8%, respectively.

Investors are awaiting Chinese industrial output, retail sales and investment data on Sunday for clues on whether the world’s second-largest economy is continuing to lose momentum, which could help set the tone for trading next week.

Major US stock indexes posted modest gains on Thursday, but European stocks broke a three-day run of gains with a drop of nearly 1.5%

Japan’s Nikkei stock index closed down 0.2%, but pared earlier losses and ended a choppy week 2.6% higher, even as investors remained cautious.

“We could still see volatile trading next week on speculation about the Fed rate hike,” said Yutaka Miura, senior technical analyst at Mizuho Securities, who expected investors to continue unwinding their positions.

“Even if stocks jump, we don’t know if and how long the rally will last so it’s safe to reduce positions in an environment like this,” Miura said.

Government data released before the market open showed that large Japanese manufacturers’ sentiment turned positive in the July-September quarter, suggesting that companies were taking China’s recent slowdown in stride.

Yuan firms, dollar steadies

US data on Thursday suggested the labour market was gaining momentum in early September as fewer Americans filed for weekly unemployment benefits, but a separate report showed weak inflation, further clouding the outlook for what the Fed will decide to do at its 16-17 September policy meeting.

“Based on the performance of the US economy alone, the Fed should raise rates but they do not operate in a vacuum,” said Kathy Lien, managing director at BK Asset Management in New York.

Considering volatile global equities, a dovish European Central Bank and actions by other central banks, it will be difficult for the Fed to act, she said in a note to clients.

The dollar rose about 0.1% against the yen to 120.75, though it gave up ground late in the Asian session to the euro, which added about 0.1% from US levels to $ 1.1294.

The dollar index, which tracks the greenback against a basket of six major rivals, was steady from US trading at 95.454.

China’s yuan firmed against the dollar in onshore trading on Friday. The greenback came under pressure overnight as the yuan shot higher in offshore markets on what was suspected to be rare intervention by Chinese state banks, likely taking aim at speculators betting on further falls in currency after its surprise devaluation last month.

In commodities, US crude oil futures gave back some of their overnight gains after top exporter Saudi Arabia said it saw no need for a producer summit to defend prices.

US crude was down about 0.6% in Asian trading at $ 45.66 a barrel, after rallying 4% on US Energy Information Administration data that showed strong demand for gasoline.

Brent, which gained 2.8% in the previous session, was down about 0.1% at $ 48.86.

Spot gold edged down from US levels to $ 1,110.30 an ounce, on track to drop about 1% for the week, its third straight weekly fall.