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Asia: Markets struggle, but dollar rally lifts Tokyo

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[HONG KONG] The dollar barrelled ever higher on Thursday, sitting at an eight-month high against the yen and fuelling another rally in Tokyo stocks but most other markets turned negative on profit-taking.

US investors gave their Asian colleagues another strong lead with the Dow hitting a new record on Wall Street after fresh data showed further improvement in the US economy and reinforced expectations for an interest rate hike next month.

Global markets have largely been piling higher since Donald Trump's shock election win two weeks ago, with traders betting his big spending, high tax plans will bolster an already healthy economy.

However, there are concerns among emerging market governments that his threats to tear up global trade deals could lead to an era of protectionism and throw up huge US tariffs.

Market voices on:

"There's a favourable bias to equities, given the expectations post Trump's election that US growth will pick up as a result of more fiscal spending and a reduction in corporate tax rates," Chris Green, director of economics and strategy at First NZ Capital Group in Auckland, told Bloomberg News.

The near certainty that Mr Trump's policies will fuel inflation, forcing the Federal Reserve to lift rates, has pushed the dollar higher.

On Thursday it headed towards the 113 yen mark for the first time since April - touching 112.97 yen before easing - while it was also sharply up against most other units.

The tumbling yen lifted exporters on Tokyo's Nikkei index, which was 1.1 per cent higher as it reopened after a day's holiday.

But elsewhere traders were less enthusiastic to extend recent gains. Hong Kong fell 0.4 per cent, Sydney lost 0.1 per cent and Seoul was off 0.7 per cent. Singapore shed 0.2 per cent and Taipei slipped 0.1 per cent. Shanghai was 0.1 per cent higher.

Minutes from the Federal Reserve policy meeting this month showed most board members thought a rate hike would be appropriate "relatively soon". And those thoughts were backed up by figures showing a surge in durable goods orders.

"The US economy is showing all the signs of being in great shape even before the addition of any Trump stimulus," AxiTrader chief market strategist Greg McKenna said in a note.

High-yielding Asia-Pacific currencies took a beating as investors removed their cash to seek out better returns in the US. South Korea's won fell 0.5 per cent and the Australian dollar slipped 0.7 per cent while there were also sharp losses for the Indonesian rupiah, Thai baht, New Zealand dollar and Malaysian ringgit.

The greenback broke above 50 Philippine pesos for the first time since 2008 at the height of the financial crisis.

Oil prices were mixed owing to the strong dollar and unease about the chances of success for a deal within Opec and with Russia on cutting output, with less than a week until its twice-yearly meeting.

Gold was also taking a beating, sinking more than two per cent to nine-month lows around US$1,185 as it succumbs to a flight from safe-haven assets.