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Asia stocks pare gains, US equity futures drop on delay in Senate tax bill vote

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[SYDNEY] Asian stocks pared early gains at the start of the last month of 2017 and S&P 500 Index futures declined on Friday as the US tax bill encountered stumbling blocks.

Japanese shares all but gave up an advance that briefly helped the Nikkei 225 Stock Average reclaim a 25-year high reached in November. Shares rose in Australia and Hong Kong.

The Dow Jones Industrial Average had climbed past 24,000 overnigt after John McCain backed the Senate tax bill, and the S&P 500 Index capped its longest monthly winning streak since 2007 as technology stocks rebounded.

The US dollar came under pressure after the US Senate suspended votes on the bill until Friday as it emerged a key compromise to help its passage collapsed.

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McCain's backing of the tax bill prompted optimism on its prospects as it's headed for a marathon debate on the Senate floor. Senate Majority Leader Mitch McConnell said votes on the tax bill will resume at 11am on Friday as the collapse of a key compromise to win a majority for a Senate tax overhaul left Republicans scrambling to salvage the legislation.

Markets have become sensitive to any progress on US tax reform that would give yet another impetus to an equity bull run into the final weeks of the year that has been fueled by optimism on earnings and economic growth throughout 2017.

Investors will be sifting through key data in Asia on Friday. China's Caixin manufacturing PMI may slide to 50.9 for November from 51, reflecting credit curbs, the slowing property market, and tighter environmental rules.

Japan's inflation sped up in October, though price rises are still less than half the central bank's 2 per cent target. In South Korea, inflation unexpectedly slowed to a one-year low and economic growth was slightly stronger than the central bank's initial estimate.

Meanwhile, Washington politics has again been thrust into the spotlight amid a report that the White House is weighing replacing Secretary of State Rex Tillerson as his relationship with President Donald Trump sours.

Oil posted its longest streak of monthly gains since early 2016 after an Opec-led coalition of major crude producers followed through on a long-awaited extension of supply cuts.

Markets in Indonesia, Malaysia, Pakistan and Sri Lanka are closed for holidays.

These are the main moves in markets: The Topix index fluctuated as of 10:35am in Tokyo and the Nikkei 225 Stock Average rose 0.3 per cent after earlier jumping as much as 1.2 percent to touch the highest since 1992.

Australia's S&P/ASX 200 Index advanced 0.5 per cent. The Kospi index was up 0.1 per cent.

Hong Kong's Hang Seng Index added 0.5 per cent. The Shanghai Composite Index was little changed.

Futures on the S&P 500 Index fell 0.3 per cent. The underlying gauge rose 0.8 per cent to a record at the close in New York.

The MSCI Asia Pacific Index was little changed.

BLOOMBERG

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