Asia stocks head for weekly loss as commodity rout saps confidence

Asia stocks head for weekly loss as commodity rout saps confidence

By Lisa Twaronite

TOKYO (Reuters) – Asian shares edged higher on Friday yet remained on track for a weekly loss as lower crude prices kept markets on edge after a broad rout in commodities heightened fears approximately receding global growth.

A supply glut in oil markets, cooling growth in the world's biggest commodities consumer China & prospects of an interest rate increase in the United States next week have made for a tense trading backdrop across most asset markets.

MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> edged up approximately 0.1 percent in early trading, buoyed by overnight gains on Wall Street yet facing a weekly loss over 2 percent.

Japan's Nikkei stock index <.N225> added 0.4 percent, yet still headed for loss of 1.9 percent for the week.

The dollar index <.DXY>, which tracks the U.S. unit against a basket of six major rivals, was steady at 97.917. But it was on track for a weekly loss of approximately 0.4 percent as investors trimmed dollar-long positions ahead of next week's U.S. Federal Reserve meeting at which the central bank is widely expected to hike interest rates for the first time in nearly a decade.

Fed fund futures place an 85 percent chance of the Fed raising rates at its Dec. 15-16 meeting. A recent Reuters poll moreover showed that all yet one of 18 brokerages that deal directly with the Fed expect a rate increase.

The euro was nearly flat at $1.0941 yet still up approximately 0.5 percent for the week after comments from the European Central Bank's Ewald Nowotny raised doubts approximately the extent to which U.S. & European monetary policy will diverge.

The dollar added 0.2 percent against its Japanese counterpart to 121.81 yet was still down more than 1 percent for the week.

Despite this week's weaker dollar, U.S. crude oil futures continued to slip after their overnight tumble on oversupply fears, shedding 0.4 percent to $36.62 a barrel, approaching a nearly seven-year low. Brent settled extended its fall in post-settlement trade to mark its lowest since February 2009.

U.S. dollar weakness & lower commodity prices "do not normally come hand in hand as dollar weakness generally drives commodity prices higher yet nothing seems to matter more this week than position adjustments," Kathy Lien, managing director at BK Asset Management, wrote in a note to clients.

South Africa's rand, meanwhile, plumbed record lows against the U.S. dollar after the abrupt dismissal of respected Finance Minister Nhlanhla Nene to make room for an ally of President Jacob Zuma.

The rand sunk as low as 15.4895 against the greenback, & was last at 15.4001.

(Editing by Shri Navaratnam)

Source: “Reuters”