Asia: Shares edge up, Nikkei gyrates as BOJ holds steady

[TOKYO] Asian shares edged up on Friday, on track for their biggest monthly rise since January 2012 but headed for weekly losses as investors fretted about the possibility United States interest rates could still rise this year.

Japanese shares slipped briefly and then regained their composure, while the yen rose after the Bank of Japan held policy steady.

The BOJ kept monetary policy steady as most had expected, but some investors had speculated the central bank would deliver some additional steps to support Japan's economy, and many still expect it to eventually deliver more easing. "The BOJ will probably wait to see whether the Fed may move in December, before deciding to ease further," said Hiromachi Shirakawa, chief economist at Credit Suisse Securities Japan. "As such I expect further easing by the BOJ may come in January at the earliest but it will more likely to happen in April.

The BOJ will release new long-term economic and price forecasts in its semiannual outlook report due at 3:00 pm (0600 GMT), and BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 pm (0630 GMT) to explain the policy decision.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 per cent, poised to lose 2.1 per cent for the week but gain nearly 8 per cent for October.

Japan's Nikkei was down 0.6 per cent right after the BOJ decision, but rebounded and was last up 0.2 per cent, on track for a hefty monthly gain of 9.1 per cent.

Data released before the Tokyo market opened underscored how far the BOJ has to go to approach its 2 per cent inflation target, with Japan's core consumer prices falling 0.1 per cent in the year to September, for their second straight month of declines.

However, separate data showed an unexpected drop in household spending but tighter labour conditions, suggesting wages might rise in the months ahead.

On Wall Street overnight, US indexes posted losses but were still on track for their best monthly performance in four years.

US data released overnight showed US gross domestic product in July-September increased at a 1.5 per cent annual rate, just shy of the consensus forecast for 1.6 per cent growth and slowing from a 3.9 per cent rise in the second quarter. But solid consumer spending kept alive the possibility that the Fed could deliver an interest rate increase in December.

The US central bank held policy steady on Wednesday and left the door open to hike interest rates for the first time since 2006 at its Dec 15-16 meeting.

That signal comes amid growing anxiety over a slowdown in global growth, with signs of waning momentum in China in particular stoking volatility in global markets in recent months.

Markets in China edged higher, while shares of baby goods-related companies outperformed after China's ruling Communist Party said on Thursday it would ease family planning restrictions to allow two children for all couples.

The dollar extended losses after the BOJ policy decision, slipping to an intraday low of 120.29, and was last down about 0.2 per cent at 120.83 yen. But it was still up about 0.8 per cent for the month against the backdrop of divergent monetary policy expectations.

The euro's trend was similar, with the single currency nearly flat against the dollar at US$1.0979 but down about 1.8 per cent for the month in which European Central Bank chief Mario Draghi took a surprisingly dovish stance that suggested further monetary easing steps were possible in December.

Crude oil futures slipped after the mixed US economic data exacerbated fears of oversupply and as investors took profits following a rally, but they were still on track to end a volatile week with gains.

US crude was down 0.5 per cent at US$45.83 a barrel, but was up nearly 3 per cent for the week and 1.6 for the month, while Brent slipped about 0.2 per cent to US$48.69, up 1.4 per cent for the week and 0.6 per cent for October.

REUTERS