Asian shares edge up, wary of China volatility

MSCI's broadest index of Asia-Pacific shares outside Japan set for a weekly loss of over 1%

Asian shares inched higher on Friday but were on track for a weekly loss, while the dollar edged away from highs scaled after US GDP data reinforced expectations that the Federal Reserve is on track to raise interest rates this year.

Investors kept a wary eye on China, where stocks dropped on Thursday after state media reported that banks were investigating their equities exposure in the wake of the recent dramatic rout there.

MSCI's broadest index of Asia-Pacific shares outside Japan was up about 0.1% in early trading, but set for a weekly loss of more than 1%.

Japan's Nikkei stock index was down about 0.2%, poised to log a 0.3% loss for the week.

A spate of Japanese economic data released before the open contained some worrying signals, with a drop in household spending, a fall in Tokyo-area consumer prices and a rise in the June jobless rate.

On Wall Street, US shares put in a mixed performance, as downbeat earnings offset solid economic data.

US gross domestic product data released on Thursday showed growth accelerated in the second quarter, though slightly short of some forecasts. Growth was tweaked higher in the first quarter, backing the Fed's assessment at its meeting this week that the economy was expanding "moderately."

"While some economists look at these numbers and say that they are weak or the economy is worse off than before because of the downward revisions in 2012 and 2013, we believe there's enough here for the Fed to raise interest rates for the first time in 9 years," said Kathy Lien, managing director at BK Asset Management in New York.

"While we are bullish dollars and believe that further gains are likely, there's just under 2 months to the next monetary policy meeting and the dollar is overbought," she said in a note to clients.

The dollar inched down about 0.1% on the day against its Japanese counterpart to 123.985 yen , after rising as high as 124.58 overnight, its loftiest level since June 10.

The euro edged about 0.1% higher to $1.0942 , after dropping to a one-week low of $1.0835 on Thursday.

The dollar index, which tracks the greenback against a basket of six major rivals, was about 0.2% lower at 97.389 <.DXY>, after rising to a one-week high of 97.773 overnight.

Crude oil was under pressure after dropping overnight in line with a stronger dollar, which makes dollar-denominated commodities less appealing to investors holding other currencies. US crude was slightly down at $48.49 a barrel.

The stronger greenback also pushed down gold, which plunged 1% with a 5-1/2-year low in sight. Spot gold