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Asian shares weaken on trade worries, bonds recover as China rebuts report, Bitcoin slumps

Reuters  |  TOKYO 

By and Hideyuki Sano

(Reuters) - The New Year rally in Asian petered out on Thursday due to concerns about rising U.S. protectionism, while bonds rebounded after China's regulator called a report about slowing or halting of its U.S. bond buying possibly wrong.

Bitcoin fell more than 11 percent after said it was preparing a bill to ban trade in the cryptocurrency.

MSCI's broadest index of outside shed 0.5 percent, slipping further from Tuesday's 10-year peak. Japan's Nikkei also lost 0.5 percent.

Bitcoin dropped to $13,189 on the Bitstamp exchange, after South Korea's said a bill was being prepared to ban cryptocurrency trading.

U.S Treasuries pared some of their losses, pushing down the 10-year yield to 2.531 percent from Wednesday's ten-month high of 2.597 percent, hit after a report that is considering slowing or halting purchases of bonds.

The country's foreign exchange regulator said on Thursday the report may be based on erroneous information and could be "fake", prompting investors to buy back bonds.

"That should have been good for the U.S. dollar, but it's still trading very weakly - it's a weak dollar story," said Masashi Murata, for in "The market seems to have been looking for one-sided to sell the dollar, this week."

Globally bonds had been spooked by the of Japan's routine announcement on Tuesday of a reduction in purchases of longer-tenor bonds and a jump in on top of the report about China's investment in U.S. bonds.

Those factors combined to push 10-year Treasury yields to their highest levels since March, and also pressured the dollar and stock

U.S. snapped their New Year rally on Wednesday while the Canadian dollar and the Mexican peso fell after a report said increasingly believes that U.S. will soon announce his intention to withdraw from the North American Agreement treaty.

"I would think that is flexing its muscles as the is looking into measures to deal with its trade deficit with China," said Daisuke Uno, at Sumitomo Mitsui

"I have been expecting rising trade frictions between the and this year. It appears is quick to touch the Achilles heel of the States," he added.

Reports on investigations into U.S. imports are due to be sent to Trump this month, including probes into whether imports of and aluminium threaten U.S. national security.

A separate probe into Chinese intellectual property practices may also conclude as early as this month, Axios reported, and could result in tariffs on the country's

The speculation that may reduce its buying in U.S. bonds helped to underpin the euro, the most obvious alternative to the dollar for assets.

The euro traded at $1.1948, nearly flat on the day, and holding above Tuesday's low of $1.1916.

Against the yen, the dollar added 0.3 percent to 111.76, after hitting a six-week low of 111.27 yen in the previous session when it skidded 1.1 percent to mark its largest decline in almost eight months.

The yen was buoyed this week after a cut in the of Japan's bond buying on Tuesday fuelled speculation that the central could eventually seek to exit from its stimulus later this year, following in the footsteps of other major central banks.

The BOJ maintained the amount of its bond purchases on Thursday, helping to soothe a market rattled by its reduction earlier this week.

The Canadian dollar traded at C$1.2550 per after having lost 0.7 percent on Wednesday.

jumped on Wednesday and settled near three-year highs after data showed a drop in crude inventories and production, though the fall in the latter could be the result of extreme cold temperatures across the

U.S. Intermediate (WTI) crude futures traded at $63.50 per barrel, after hitting a high of $63.67 in the previous session, their loftiest level since December 2014.

Brent crude futures traded at $69.10 a barrel after rising as high as $69.37 on Wednesday, highest since May 2015.

Spot gold was up 0.2 percent at $1,319.17 an ounce after spiking to nearly four-month highs in the previous session, in line with the dollar's plunge. [GOL/]

(Editing by Simon Cameron-Moore)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 11:22 IST