Shares set for second best week of 2013, dollar holds near 100 yen

By Chikako Mogi

TOKYO (Reuters) - Asian shares retreated on Friday after recent gains, with investor confidence underpinned by Wall Street's record-high close overnight, while the yen hovered near four-year lows against the dollar.

European markets were likely to ease also, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> to open down as much as 0.5 percent. <.l><.eu/>

U.S. stock futures were also down 0.1 percent, pointing to a weak Wall Street open after the Dow Jones industrial average <.dji> and the Standard & Poor's 500 Index <.spx> both set new closing records on Thursday.

"A little caution seems to have crept into sentiment overnight as a few possible negative cues circle the markets," said Jonathan Sudaria, a dealer at Capital Spreads in London, in a note to clients.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> fell 0.3 percent, led by a 1.1 percent drop in South Korean shares <.ks11> and a 0.2 percent fall in Shanghai shares <.ssec>.

Other regional bourses were higher.

The pan-Asian index was set for a weekly gain of 1.9 percent, its biggest rise in three months, as the week began at a four-month low after disappointing U.S. jobs data fuelled concern about the American economy.

"Asian equities are overall becoming a bit top-heavy, with lingering worries about tightening measures on property sectors in China and their economic impact, as well as uncertainty over the developments in North Korea," said Hirokazu Yuihama, a senior strategist at Daiwa Securities in Tokyo.

A Pentagon spy agency concluded for the first time that North Korea likely has the ability to launch nuclear-armed missiles, illustrating the high stakes surrounding the escalating tensions on the Korean peninsula.

But the Pentagon said on Thursday it would be inaccurate to suggest that North Korea has proven it has the ability to launch a nuclear-armed missile.

Seoul shares, already battered by the tensions on the peninsula, declined on expectations of weak earnings by South Korean firms and the impact of a weaker yen on exporters.

"Overall, auto earnings are expected to miss forecasts for the January to March period, because of the stronger South Korean won. The yen's slide is also hurting sentiment," said Cho Soo-hong, an analyst at Woori Investment & Securities.

Australian shares <.axjo> edged up 0.2 percent as a drop in mining stocks offset strength among financials and defensive stocks.

Ric Spooner, market strategist at CMC Markets, noted the Australian market had put in some weak performances despite a strong lead on Wall Street recently.

"We had quite a strong run in our market, and our market is probably more generously valued than the U.S. market," he said.

RISK SENTIMENT

Risk sentiment remained intact overall, supported by the Bank of Japan's aggressive stimulus campaign. The BOJ last week pledged to inject about $1.4 trillion into the economy to end a long phase of deflation and achieve its target of 2 percent inflation.

Having gained nearly 10 percent over the past week to reach its highest level since July 2008 earlier this session, the Nikkei stock average <.n225> fell 0.8 percent as investors booked profits.

"Unless there are strong catalysts to drive the market higher such as the yen further weakening to 100 yen against the dollar, profit-taking is natural given the steep rises," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

The dollar has gained about 6 percent against the yen over the past week, and on Thursday it hit a four-year high of 99.95 yen.

The euro climbed as far as 131.10 yen, its highest since January 2010, and the Aussie dollar soared to 105.43 yen, the highest since November 2007.

On Friday, the U.S. dollar was at 99.52 yen and the euro at 130.55 yen.

Spot gold was barely changed but was on track for a third straight weekly drop as strong stock markets lured investors seeking better returns while outflows from exchange-traded funds reflected the precious metal's shaky outlook.

U.S. crude futures eased 0.3 percent to $93.20 a barrel while Brent steadied around $104.20.

(Additional reporting by Ayai Tomisawa in Tokyo, Hyunjoo Jin and Seong-won Chang; in Seoul, and Thuy Ong in Sydney; Editing by Sanjeev Miglani)

Source: http://news.yahoo.com/asian-shares-steady-yen-faces-fresh-low-vs-002305587--finance.html

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