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Asia: Stocks mixed ahead of US growth data

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[SINGAPORE] Asian stocks were mixed Friday as investors digested results from American tech titans and waited for the release of US data expected to show a surge in economic growth.

US markets were dragged down Thursday after Facebook warned of weaker growth, sending its shares falling nearly 20 per cent and wiping out some US$100 billion in market value.

But the stock market gloom was lifted slightly after Amazon delivered better-than-expected profits. The online colossus' net profit in the past quarter jumped 12-fold to US$2.5 billion on the back of gains made from its rapid global expansion.

"Earnings continue to have... (a) hold upon markets with the latest Amazon.com surprise looking to offset some of the pressure brought about by Facebook," said Jingyi Pan, market strategist at trading group IG.

Tokyo was up 0.2 per cent in morning trade, while Sydney rose 0.9 per cent after a deal between mining giant BHP and BP lifted the vital mining sector.

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Shanghai retreated 0.2 per cent, Hong Kong lost 0.3 per cent, and Seoul was little changed.

With few trading cues in Asia, all eyes turned to the released of US data later Friday which is expected to show an exceptional surge in economic growth in the second quarter that President Donald Trump can use to trumpet the success of his economic agenda.

The unusual result, which economists say could be the strongest in four years, is partly thanks to Mr Trump's trade wars - but those same disputes threaten to drag growth lower in the coming months and years.

Current forecasts say the second-quarter GDP estimate could show growth was anywhere between four and five percent - the fastest pace since the third quarter of 2014.

There are special factors behind the growth spurt linked to the trade disputes, which include 25 per cent US tariffs on US$34 billion in Chinese goods - with more on the way - and steep tariffs on steel and aluminium, which provoked China and others to hit back with import duties on US goods.

Mr Trump and European Commission chief Jean-Claude Juncker made an attempt to resolve their festering trade dispute earlier this week, with the US leader pulling back a threat of tariffs on the auto sector after talks in Washington.

The plan sparked a rally in European equities on Thursday, with sharp rises in French and German carmakers.

Asian markets have reacted more cautiously to the EU-US agreement, with analysts noting that the big trade row affecting the region - with China - is still rumbling on.

"The reality is the main game remains China and there is no sign yet that the US is likely to back off," said Greg McKenna, chief market strategist at AxiTrader.

With many believing the EU had given ground to the US in their dispute, Mr Trump may take it as a sign "his belligerent approach is the right one", added Mr McKenna.

In currency markets, the euro remained under pressure after the European Central Bank left interest rates unchanged at a regular meeting and said its planned exit from massive stimulus measures was on track.

AFP

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