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[SINGAPORE] Asian shares fell and the dollar held near an 8-1/2-month peak on Friday, while the euro hovered around seven-month lows on expectations of additional stimulus from the European Central Bank next week.
The broadest index of Asia-Pacific shares outside of Japan slid 0.5 per cent, extending losses for the week to 0.7 per cent.
Japan's Nikkei reversed earlier gains to slip 0.3 per cent, but was on track for a weekly gain of 0.2 per cent. The Shanghai Composite index retreated 0.6 per cent, heading for a 0.5 per cent drop for the week.
The dollar index against a basket of major currencies was little changed at 99.852, after scaling 100.170 earlier in the week, the highest since March. It is up 0.3 per cent for the week.
U.S. stock futures rose 0.3 per cent to their highest level since Nov. 9 after a market holiday on Thursday for Thanksgiving Day.
Although the US holiday thinned global financial trade, the pan-European FTSEurofirst 300 index gained 0.9 per cent on Thursday to end at three-month high, led by German shares. "The DAX/S&P ratio has pushed up 10.7 per cent since October, showing robust outperformance of the German market," Chris Weston, chief market strategist at IG in Melbourne, wrote in a note. "The correlation between a weaker EUR/USD and higher DAX/S&P ratio is strong." The European Central Bank meets next Thursday and most in the market expect it to expand its asset purchase programme and lower its deposit rate, the rate at which banks park excess funds with it.
Traders are now speculating that the ECB could cut rates more than the previous market consensus of a 0.10 per centage point reduction.
The euro's three-month overnight indexed swap (OIS) rate fell to a new low around minus 0.2810 per cent, almost 15 basis points below the current fixing level of the Overnight Eonia rate.
With keeping money in the euro seen increasingly costly because of negative interest rates, the common currency was on the defensive in the foreign exchange market.
The euro traded at US$1.0610, not far from Wednesday's seven-month low of US$1.0565. It also stood near a seven-month low against the yen, last fetching 130.07 yen. "You keep losing money by holding the euro. It is hard to see the euro rising. True, it is already heavily shorted but I expect the euro to fall towards parity with the dollar," said a trader at a Japanese bank.
The yen was little changed against the dollar at 122.58 per dollar, showing no response to a series of Japanese economic data including the jobless rate, which unexpectedly fell to a two-decade low of 3.1 per cent.
China's onshore yuan opened at its lowest level in almost three months as investors braced for a decision on Monday by the International Monetary Fund on the yuan's inclusion its reserve basket.
The spot market opened at 6.3928 per dollar and was changing hands at 6.3942, 46 pips weaker than the previous close and about 0.04 per cent away from People's Bank of China's midpoint rate of 6.3915.
Oil prices edged lower, with US stockpile data on Wednesday doing little to ease concerns about a supply glut.
U.S. crude futures fell 1.2 per cent to US$42.52 a barrel as traders also unwound some of the buying they had made after Turkey had shot down a Russian warplane earlier this week.
Brent futures edged down to US$45.46 a barrel, compared to their two-week high of US$46.50 hit earlier this week.
Battered metal prices also rebounded as hedge funds covered their short positions for now.
Benchmark copper on the London Mental Exchange rose 1.9 per cent on Thursday to US$4,636.15 per tonne, recovering 4.3 per cent from Monday's 6 1/2-year low of US$4,443.50. They extended the gains on Friday, advancing 0.3 per cent to US$4,650, on track for a weekly gain of 1.5 per cent.
Zinc and Nickel also jumped sharply on Thursday, helped by expectations of output cuts in China.