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Asian shares edge higher, Fed chief speculation tempers appetite

[TOKYO] Asian shares inched slightly higher on Friday, but grappled for firmer leads as speculation about who the next US central bank chief will be kept global investors wary.

Shares in New Zealand slipped 0.1 per cent, snapping 13 gaining sessions, after the nationalist New Zealand First Party agreed to form a new government with centre-left Labour Party following weeks of political negotiations.

MSCI's broadest index of Asia-Pacific shares outside Japan, which scaled a 10-year peak on Tuesday, was up 0.1 per cent in early trading, but still down 0.2 per cent for the week.

Japan's Nikkei slipped 0.3 per cent, still on track for a robust weekly gain of 1.1 per cent. The Nikkei logged its 13th winning session on Thursday, its longest such streak since 1988.

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US stocks were almost flat on Thursday, with Apple Inc falling 2.4 per cent on signs of weak demand for the iPhone 8 that caused analysts and investors to question the company's staggered release strategy for its latest phones.

The US dollar buckled and US bond yields dipped after a report that President Donald Trump was leaning toward Jerome Powell as the next chair of the Federal Reserve.

Mr Powell is the most dovish among three other Republican candidates. The current chair, Janet Yellen, a Democrat who is seen as a policy dove, is also on Mr Trump's short list, though few investors expect Mr Trump to nominate a Democrat to the job.

"Clarity about the Fed nomination would be positive for the dollar," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.

The US dollar index, which tracks the greenback against a basket of six major rivals, inched 0.1 per cent lower to 93.163, up slightly for the week.

The US dollar edged up to 112.59 yen, on track to gain 0.7 per cent for the week, after notching a nearly two-week high of 113.145 yen on Thursday, as investors awaited Sunday's Japanese general election.

In Europe, shares notched their largest drop in two months on concerns over political upheaval in Spain and after disappointing results from large companies such as Unilever, France's Publicis and Germany's Kion.

Spain's central government said on Thursday it would suspend Catalonia's autonomy and impose direct rule after the region's leader threatened to go ahead with a formal declaration of independence if Madrid refused to hold talks.

Japanese Prime Minister Shinzo Abe's ruling bloc is expected to secure a roughly two-thirds majority in Sunday's general election.

That kind of result would not have a big impact on the yen," said Mr Yamamoto, "but it is important to see whether or not the (ruling Liberal Democratic Party) considers it a victory for Abe or not, and it's difficult to say where the threshold for that might be."

The euro ticked up to US$1.1848, from this week's low of US$1.1730.

The New Zealand dollar licked wounds at US$0.7009 after a 1.7 per cent fall on Thursday, its largest daily fall since June 2016. The small, nationalist New Zealand First Party agreed to form a new government with Labour Party leader Jacinda Ardern, ending the National Party's decade in power.

Crude oil prices firmed after shedding more than one per cent on Thursday, breaking four days of gains, pressured by larger-than-expected product inventories in the United States and profit-taking after a recent run-up in markets.

Brent crude was up nine cents at US$57.32 a barrel, while US crude added 13 cents to US$51.42.

REUTERS