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Asia: Shares dip as commodities ease, bitcoin licks wounds

[TOKYO] Asian stocks stepped back from a record high on Wednesday as the region's resource shares were hit by falling oil and commodity prices while digital currencies tumbled on worries about tighter regulations.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.15 per cent from its record high as resource shares declined after oil and other commodities succumbed to profit-taking after recent gains.

Japan's Nikkei fell 0.4 per cent from its 26-year peak hit the previous day.

Wall Street paused its rally, hit by a 1.2 per cent fall in energy stocks as well as weakness in General Electric.

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The US conglomerate raised the prospect of breaking itself up and announced more than US$11 billion in charges from its long-term care insurance portfolio and new US tax laws.

Cboe volatility index, which measures investors' expectation on price swings in US shares, rose to a one-month closing high of 11.66 from near record low levels seen earlier this month.

World shares have rallied since the start of this year on prospects of strong global growth and improving earnings in the US and elsewhere.

Indeed, MSCI's broadest gauge of the world's stock markets rose 0.3 per cent to another record high on Tuesday, extending its gain so far this month to 4.2 per cent.

"US corporate earnings are beating estimates more than usual. People have been talking about 'goldilocks economy',"said Soichiro Monji, chief strategist at Daiwa SB Investments, adding market fundamentals remain solid. "Now they are starting to think a 'red-hot' economy may be a better description."

In the currency market, the dollar was broadly weak, sticking near a three year low against a basket of currencies.

"As more countries in the world are starting to unwind their stimulus, the dollar's yield advantage will shrink and prompt a correction in the dollar's strength since 2014," said Minori Uchida, chief FX analyst at Bank of Tokyo Mitsubishi-UFJ.

The Bank of Canada is widely expected to raise its benchmark interest rate by 25 basis points to 1.25 per cent later in the day, with analysts expecting three hikes this year.

Investors also expect the European Central Bank's eventual exit from stimulus as a major market theme for this year.

Three sources close to the ECB's policy told Reuters that the ECB is unlikely to ditch a pledge to keep buying bonds at next week's meeting just yet as rate setters need more time to assess the outlook for the economy and the euro.

Although the report briefly pushed down the euro on Tuesday, the currency scaled a three-year high of US$1.2323 in Asian trade on Wednesday.

The ECB last week signalled a growing appetite for revising its policy message in "early" 2018, and specifically a promise to continue its 2.55 trillion euro money-printing programme until inflation heads back to target.

The dollar also hit a four-month low of 110.19 yen before steadying around 110.56 yen. The Chinese yuan flirted with Monday's two-year high in both onshore and offshore trade.

Gold traded at US$1,340.6 per ounce, near Monday's four-month peak of US$1,344.7.

On the other hand, digital currencies tumbled, with bitcoin falling to a six-week low of US$10,162 after reports said South Korea and China could ban trading, which intensified fears of a wider regulatory crackdown.

"Cryptocurrencies could be capped in the current quarter ahead of G-20 meeting in March, where policymakers could discuss tighter regulations," said Shuhei Fujise, chief analyst at Alt Design.

Bitcoin traded at US$10,968, down 3.7 per cent in Asia, after a fall of 16.3 per cent on Tuesday, its biggest daily decline in four months.

Oil prices pulled back from three-year highs as traders booked profits but healthy demand underpinned prices near US$70 per barrel, a level not seen since the market slump in 2014.

Prices have been driven up by oil production curbs in Opec nations and Russia, and demand amid healthy economic growth US crude futures traded little changed at US$63.80 per barrel after hitting a December 2014 peak of US$64.89 on Tuesday.

Global benchmark Brent crude futures fetched US$69.24 a barrel, off a peak of US$70.37 on Monday, which matched a high from December 2014 at the start of a three-year market decline.

REUTERS

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