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Asia stocks dip on China tightening fears, yen up (Reuters)
to tighten monetary policy sooner than expected, while the yen rebounded against major currencies.
European equities were set track Asia lower, with financial spreadbetters expecting Britain's FTSE 100 (.FTSE), Germany's DAX (.GDAXI) and France's CAC 40 (.FCHI) to fall as much as 0.5 percent.
(.MIAPJ0000PUS) shed 0.5 percent, retreating from a seven-week high touched before the release of the Chinese data, which showed stronger-than-expected growth in factory output and consumer inflation accelerating to a 16-month high.
Some economists said the central bank would probably not wait long before increasing banks' required reserves for a third time this year and perhaps even raising interest rates.
Broader losses were limited, however, by the view that gradual policy tightening in
would do little to slow its robust growth and that Asia's economic recovery remains on track.
Foreign buying of Asian stocks, particularly South Korea, Japan and
, continued unabated with data showing
funds reported a third straight week of inflows.
Shanghai stocks (.SSEC) shed as much as 0.8 percent as investors feared that strong loan growth in February could prompt the authorities to soak up more cash from the financial system. But the market later recouped its losses to stand slightly higher, as did the
(.HSI) in
.
drained a net 82 billion yuan from money markets this week by issuing large amounts of bills, as part of its efforts to head off economic overheating and asset bubbles.
“February new loans remained higher than the government intends it to be, so we expect another rise in bank
to come very soon, almost certainly this month,” said Zheng Weigang, head of investment at Shanghai Securities.
will wait at least until the second quarter.”
in recent weeks, alongside jitters over debt problems in some European countries.
's Nikkei average (.N225) bucked the regional weakness, rising 0.9 percent as exporters such as Sony (6758.T) climbed on general weakness in the yen.
can't really move actively because this month is the end of the business year in Japan,” said Tsuyoshi Segawa, an equity strategist at
.
“The focus will be on important events in Japan, the United States and
all happening next week, namely the
review as well as Greece's future plans.”
.
The yen climbed after the Chinese data prompted investors to cut their long positions in higher-yielding currencies.
The dollar fell a fifth of a percent to 90.35 yen, having climbed as far as 90.83 on Wednesday, a two-week high.
may ease monetary policy as early as next week as it remains under government pressure to help pull the country out of grinding deflation.
Data on Thursday showed the economy grew less than initially expected in the fourth quarter of 2009 and a broad gauge of price trends hit a record negative reading.
The euro dropped to 123.28 yen, while sterling eased to $1.4955 after an unexpected drop in British
for January released the previous day.
The Australian dollar took a knock after the Chinese data but later bounced on bets of further interest rate rises at home.
Gold regained some strength after falling to its weakest in nearly two weeks the previous day, while
retreated 50 cents from an eight-week high hit on Wednesday.