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Asia: Stocks fall, US futures drop as bonds rise

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[SYDNEY] Asian stocks extended declines at the end of a torrid week that dragged the region's equities deeper into a bear market. Treasuries rose and US equity futures fell after disappointing reports from technology bellwethers.

Japanese shares reversed early gains, on track for a slide of more than 5 per cent this week. Equities in Hong Kong and Australia edged lower, while losses were greatest in South Korea. China's Shanghai Composite fluctuated.

A decline in US futures showed any optimism for technology firms from Thursday's session was quickly dented after Amazon and Alphabet results. The S&P 500 Index had risen for the first time in seven days on earnings from Twitter, Microsoft and Tesla. The offshore yuan extended this week's slide to trade at the lowest since January 2017.

"You're going to see a lot more volatility," Con Michalakis, chief investment officer at Statewide Super, told Bloomberg TV in Sydney. "It's going to be a feature of this environment."

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Sentiment remains fragile after more than US$6.7 trillion was lost from the value of global equities since late September as lofty expectations for earnings were tested amid heightened trade tensions and tightening financial conditions.

Investors remain apprehensive as a flood of earnings, while mostly stellar, have come with warnings about the future impact of tariffs and rising costs.

Amid discussion of whether the Federal Reserve would slowdown its tightening path, vice-chair Richard Clarida backed further gradual rate hikes while delivering an upbeat assessment of the economy in his maiden speech. The central bank is "as near as it has been in a decade" to meeting its twin goals of full employment and price stability, he said.

In Europe, the euro retained declines in the wake of European Central Bank President Mario Draghi downplaying the recent slowdown in economic momentum and Italian fiscal risks, reiterating that growth is returning to potential. The ECB kept its target rate unchanged at zero.

Elsewhere, West Texas oil dipped back below US$67 a barrel. Copper extended this week's retreat.

These are the main moves in markets:

STOCKS

Japan's Topix index dropped 0.8 per cent as of 12.25pm in Tokyo.

The Shanghai Composite slid 0.6 per cent.

Australia's S&P/ASX 200 Index dropped 0.7 per cent.

Hong Kong's Hang Seng tumbled 1.4 per cent.

The S&P 500 rose 1.9 per cent and the Nasdaq Composite Index increased 3 per cent. Futures on the S&P 500 and the Nasdaq 100 each fell at least 1 per cent.

CURRENCIES

The yen rose 0.2 per cent to 112.15 per dollar.

The offshore yuan retreated 0.2 per cent to 6.9720 per dollar.

The Bloomberg Dollar Spot Index rose 0.1 per cent.

The euro bought US$1.1367, slipping 0.1 per cent.

BONDS

The yield on 10-year Treasuries slid one basis point to 3.11 per cent.

COMMODITIES

West Texas Intermediate crude fell 0.9 per cent to US$66.72 a barrel.

Gold was steady at US$1,230.11 an ounce.

BLOOMBERG