By Shinichi Saoshiro | TOKYO
Asian stocks were mostly lower on Friday as the dollar climbed to seven-month highs against a basket of currencies and dragged down crude oil prices, cooling investor risk appetite.
Equities were expected to continue sagging in the European session, with spreadbetters forecasting a slightly lower open for Britain’s FTSE, Germany’s DAX and France’s CAC.
The greenback was boosted by a fall in the euro after the European Central Bank shot down talk it was contemplating tapering its monetary easing – sending the common currency to its lowest since March.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent.
Japan’s Nikkei brushed a six-month high earlier on a weaker yen but was last down 0.3 percent.South Korea’s Kospi lost 0.5 percent and Australian stocks shed 0.2 percent, weighed down by a retreat in energy shares. Singapore fell 0.7 percent and Shanghai erased earlier gains and dropped 0.2 percent as the yuan depreciated.
China’s offshore yuan fell to its lowest level in six years against the broadly stronger dollar.
“Further yuan depreciation, which many people expect, is good for exporters, but it will also have a negative psychological impact and curb risk appetite,” said Yang Hai, analyst at Kaiyuan Securities.
The ECB left its ultra-loose monetary policy unchanged on Thursday but kept the door open to more stimulus in December, with ECB President Mario Draghi dousing recent market speculation that the central bank may begin tapering its 1.7 trillion euro asset-buying program.
“The European Central Bank removed a source of immediate risk for traders by revealing that it did not discuss tapering its QE program at this month’s meeting,” wrote Ric Spooner, chief market analyst at CMC Markets.
“Decisions are being deferred until December pending the outcome of research – meaning that meeting will be a key focus for markets.”
The dollar index touched 98.564, its highest since early March.
The euro was down 0.3 percent at $1.0902 after seeing a seven-month trough of $1.0896.
Sterling slipped 0.1 percent to $1.2236, taking in stride comments by European Council President Donald Tusk that British Prime Minister Theresa May had confirmed that Brexit talks would be triggered by end-March 2017.
U.S. crude futures were down 0.5 percent at $50.37 a barrel. The contract lost more than 2 percent on Thursday as the dollar’s surge prompted profit-taking on a rally that sent U.S. crude to 15-month highs midweek. Brent crude lost 0.4 percent to $51.16 a barrel. [O/R]
A stronger greenback tends to increase the purchase cost for non-U.S. buyers of commodities such as crude oil and gold, which are denominated in the dollar.
Spot gold was down 0.15 percent at $1,263.66 an ounce, although it was on track for a 1 percent gain on the week.
(Reporting by Shinichi Saoshiro; Additional reporting by Samuel Shen and John Ruwitch in Shanghai; Editing by Simon Cameron-Moore and Jacqueline Wong)