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Asian stocks drift, US dollar steady

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[SYDNEY] Asian stocks drifted Tuesday as risk appetite remained subdued and the earnings season continued. The yen edged higher, while the US dollar and Treasuries were little changed.

Equity benchmarks ticked higher in Japan and Korea with Australian shares posting declines with trading volumes below their 30-day averages. Hong Kong and Chinese stocks outperformed as investors deemed the nation's equities cheap after the recent sell-off. A Reuters report that the Bank of Japan had considered raising interest rates this year helped the yen gain.

Earlier, the S&P 500 Index closed at its highest since January as Berkshire Hathaway Inc bolstered financial shares and higher oil prices boosted energy producers. The yield on 10-year Treasuries held below 3 per cent and the Cboe Volatility Index fell to its lowest since Jan 26.

Investors largely shrugged off early concern sparked by China's signal it won't flinch in a trade war, adding to heightened rhetoric from US President Donald Trump. Meanwhile, geopolitical concerns continue to lurk in the background with confusion about the status of negotiations intended to lead to the denuclearization of the Korean peninsula and the Trump administration moving to restore some US sanctions on Iran.

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Elsewhere, the pound was little changed after weakening to an 11-month low on Brexit angst. Turkey's lira advanced after sinking to a record low as heightened concern over a diplomatic spat with the US overshadowed the central bank's attempt to support the currency.

US crude traded around US$69 a barrel after Saudi Arabian production cuts heightened concerns about tightening worldwide supplies.

KEY EVENTS COMING UP THIS WEEK:

Earnings season includes results from: Japan Post Bank, Disney, 21st Century Fox, Deutsche Telekom, China Mobile, Glencore and Adidas.

Tuesday brings the latest Reserve Bank of Australia meeting that is forecast to produce no change in either the record-low cash rate or the long-term guidance.

The Bank of Japan releases a summary of opinions Wednesday from its July 30-31 meeting, at which it tweaked elements of its stimulus policy to make it more sustainable.

Samsung Electronics unveils its next Galaxy Note smartphone.

US consumer prices probably rose in July, consistent with a pickup in inflation that's projected to keep the Federal Reserve on a path of gradual interest-rate increases, economists forecast before Friday's release.

STOCKS

Topix index rose 0.4 per cent as of the break in Tokyo. Australia's S&P/ASX 200 Index fell 0.4 per cent.

South Korea's Kospi index rose 0.3 per cent. Hong Kong's Hang Seng Index added 0.9 per cent. Shanghai Composite Index gained 1.4 per cent.

Futures on the S&P 500 were little changed. The S&P 500 rose 0.4 per cent Monday.

CURRENCIES

The Japanese yen rose 0.1 per cent to 111.34 per US dollar after declining 0.2 per cent.

The offshore Chinese yuan traded at 6.8638 per US dollar.

The euro was at US$1.1558 after reaching the weakest in almost 13 months on its fifth straight decline.

The British pound traded at US$1.2942, near the weakest in about 11 months.

The Bloomberg Dollar Spot Index was little changed around the highest in more than two weeks.

BONDS

The yield on 10-year Treasuries held at 2.94 per cent.

Australia's 10-year bond yield fell five basis points to 2.67 per cent.

The yield on 10-year Japanese bonds was at 0.11 per cent.

COMMODITIES

West Texas Intermediate crude rose 0.1 per cent to US$69.09 a barrel.

Gold rose 0.2 per cent to US$1,209.90 an ounce.

BLOOMBERG