Asian shares recover from downside, growth worry caps

Asian shares clawed back some of the previous day's steep losses on Friday as investors took some comfort in the Federal Reserve's commitment to ultra-soft monetary policy for now, but weak US and European data capped prices.

Worries about the global economic outlook lifted spot gold up 0.3 per cent to $1,581.40 an ounce, while sluggish data underscoring the need for the Fed's continued monetary stimulus pushed the dollar down 0.2 per cent and away from a 5-1/2-month high against a basket of currencies seen on Thursday.

The euro inched up 0.1 per cent to $1.3197 after falling to a six-week low of $1.31615 on Thursday, and was trading up 0.1 per cent to 122.85 yen after hitting a three-week trough of 122.25 yen on Thursday.

Most risk assets slid to 2013 lows on Thursday, in part because of worries the Fed could prematurely wind down its bond buying programme. The sharp fall came as many markets had been advancing to their highs, bolstered by receding worries about the euro zone's debt crisis.

"In America they're kind of revealing that actually the next thing we need to do is start tightening, and that's why global stocks are very volatile at the moment and we're going to be caught up in that," said Damien Boey, equity strategist at Credit Suisse.

The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 per cent, after tumbling 1.5 per cent on Thursday for its sharpest one-day slump in seven months. The index was set for a weekly loss of 0.6 per cent.

Upbeat comments from the central bank governor helped Australian shares jump 1.2 per cent, with investors buying back after stocks slumped 2.3 per cent for their biggest one-day fall since May in the previous session.

South Korean shares rose 0.4 per cent while Hong Kong shares bucked the regional trend and fell 0.5 per cent.

Tokyo's Nikkei stock average eased 0.5 per cent.

London copper climbed 0.7 per cent to $7,917 a tonne, after posting its biggest single-day slide this year on Thursday.

Crude oil futures recovered from Thursday's sell-off, with US crude up 0.4 per cent to $93.25 a barrel and Brent rising 0.5 per cent to $114.07.

"Financial markets appear to be at a transitional point. Following on from the 'Great Moderation' and the 'Great Recession', there now seems to be a debate over the next 'Great' theme," Barclays Capital said in a research.

Italy, US budget eyed

US Treasury yields were a tad higher in Asia, after easing the previous session following several indicators pointing to slow economic growth, such as weekly jobless benefit claims and factory activity.

The euro zone's blue-chip Euro STOXX 50 index fell to a fresh 2013 low on Thursday as unexpectedly weak business activity indexes dampened hopes the euro zone would emerge from recession soon.

Sentiment towards Europe was also hurt by uncertainty ahead of Italy's election over the weekend. Most investors expect a centre-left government to win and continue with reforms to tackle Italy's debt problems. But a resurgence of former leader Silvio Berlusconi has raised new worries.

Caution remained over the US fiscal woes, with President Barack Obama and top Republican lawmakers so far failing to reach a deal to avert "sequestration" cuts that are set to kick in on March 1, which economists warn would hurt the economy and lead to job losses.

The dollar steadied against the yen around 93.12.

Copyright @ Thomson Reuters 2013