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Asian markets swing as painful quarter draws to close

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[HONG KONG] Asian markets fluctuated through the morning as investors headed for the end of a tumultuous quarter that has seen sharp losses around the world, with China-US trade tensions showing no sign of calming.

Trading floors have witnessed heavy selling in April-June as the two biggest economies exchanged threats of tariffs - and in some cases imposed them - on billions of dollars of imports, fuelling fears for global growth.

An increasing source of concern for many investors is China, where the main stock market is in bear territory after losing more than 20 per cent from a recent peak and the yuan continues to struggle.

Many analysts warn that any trade war with the US would likely hurt Beijing more, with growth already showing signs of slowing this quarter and authorities looking to provide support.

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That comes just as the US perks up with the Federal Reserve expected to press ahead with interest rate hikes this year and next, and expansion likely to impress further.

The ongoing US strength "implies that the Fed will keep hiking rates because it will need to", said Greg McKenna, chief market strategist at AxiTrader.

"It implies that bonds will continue to have an upward bias, it implies that earnings for US companies should do OK, and it implies that the US will stand out as an investment destination as the de-synchronisation of global growth sees other blocs and nations lag behind."

With investors uncertain about the next moves by Donald Trump, markets are swinging back and forth despite a positive lead from Wall Street, where all three main indexes ended with gains.

Tokyo ended the morning session 0.3 per cent lower, though electronics giant Sharp soaring more than 14 per cent after saying it would cancel a plan to raise some US$1.8 billion through a public offering, citing the China-US trade frictions.

Hong Kong Kong was up 0.4 per cent in early trade and Shanghai added 0.3 per cent.

Wellington, Taipei and Manila were all up but Sydney slipped 0.1 per cent, Singapore shed 0.2 per cent and Seoul dropped 0.7 per cent.

On currency markets the US dollar rose against most high-yielding currencies, with the yuan extending losses, which has led some observers to suggest China is looking to weaken the unit in preparation for the impact of a possible trade war.

Energy firms in the region struggled to maintain their strong upward momentum from earlier in the week, despite another rise in oil prices Thursday and lingering optimism about demand after data showed a huge drop in US stockpiles.

Both main oil contracts were down Friday but have risen sharply since last week, with dealers cheered by a modest lift in an output cap by Opec and Russia.

AFP