Asia: Stocks pare weekly loss as yen gains; oil falls

[WELLINGTON] Asian shares rose from a six-week low after Apple Inc drove a rebound in the S&P 500 Index, while the yen strengthened and crude oil dropped.

The MSCI Asia Pacific Index advanced for the first time in seven days as stocks rallied in Australia, Japan and New Zealand. Futures foreshadowed gains in India and Singapore, while markets in mainland China, Taiwan, Malaysia, South Korea and Hong Kong are closed for holidays on Friday.

Japan's currency strengthened for a third day, while oil extended losses below US$44 a barrel amid concern about a glut.

Equities have been whipsawed this week after a rout last Friday jolted markets out of their two-month torpor, wiping almost US$2 trillion off the value of stocks worldwide amid concern central banks are reluctant to boost stimulus even as the global economy sputters. Attention now switches to the Federal Reserve and the Bank of Japan, both of which meet to review policy next week.

Odds on the US central bank increasing rates in September have slumped to 18 per cent, after data showed declines in retail sales and US factory output.

"With nothing in the economic numbers to say US rates should be moving up, and growing signs of losing momentum, expectations have largely diminished toward the Fed doing anything in September," Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand Ltd, said in a note to clients.

"The market is drifting back toward the view they might do nothing for quite a while."

The US has updates on inflation and consumer sentiment due Friday, reports that may sway expectations for the timing of the Fed's next interest-rate increase. Russia's central bank is forecast to cut its benchmark interest rate by half a percentage point to 10 per cent at a policy review, while European Union leaders are meeting in Bratislava to discuss the bloc's future path.

The MSCI Asia Pacific Index was up 0.4 per cent as of 9:51am Tokyo time, trimming this week's slide to 2.4 per cent. Japan's Topix index rose 0.3 per cent, while benchmarks in Australia and New Zealand gained 0.8 per cent.

Futures on the S&P 500 fell 0.2 per cent. The US benchmark climbed 1 per cent on Thursday, led higher by technology stocks as Apple climbed for a fourth day, bringing its gain so far this week to more than 12 per cent.

Apple's advance has buttressed US equity indexes this week, with most of the major American wireless carriers saying demand for the new iPhone is higher than for previous models.

The yen strengthened 0.2 per cent to 101.92 per US dollar, extending this week's advance to 0.8 per cent. Just over half of economists surveyed by Bloomberg anticipate the BOJ will ease monetary policy further on Sept 21, with an interest-rate cut seen as the most likely option.

South Africa's rand rose 0.4 per cent, the best performance among major currencies. The Bloomberg Dollar Spot Index was little changed Friday and up 0.3 per cent for the week.

Crude oil fell 0.6 per cent to US$43.65 a barrel in New York, extending its weekly slide to almost 5 per cent. Opec members Libya and Nigeria, whose supplies have been reduced by domestic conflicts, are preparing to boost exports within weeks. The oil surplus will last longer than previously thought as demand growth slumps and output proves resilient, the International Energy Agency said Tuesday.

US Treasuries were little changed, with notes due in a decade yielding 1.69 per cent. Similar-maturity notes in Japan yielded minus 0.045 per cent, compared with minus 0.02 per cent a week ago.

Australia's 10-year bonds dropped this week by the most since April, pushing their yield up by 14 basis points to 2.11 per cent. New Zealand's yield jumped 21 basis points to 2.56 per cent.

BLOOMBERG