Asian shares gain in early trading; bask in Wall Street's glow

Asian shares gained in early trading on Friday, on track for a weekly rise, after Wall Street cheered a cool reading for producer price inflation that chilled expectations of a Federal Reserve rate hike.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.3% higher, poised to gain about 1% for the week. Japan's Nikkei stock index  was up 0.5%, set for a 1.5% weekly rise.

On Wall Street, all three major indexes gained more than 1%, and the S&P 500 closed at a record.

A spate of US economic data painted an improving employment picture, but subdued producer price inflation quashed bets that the US central bank would raise interest rates sooner rather than later this year.

"We never expected the Fed to tighten next month but we were hoping that they would set the stage for a move in September." said Kathy Lien, managing director at BK Asset Management in New York. 

"However if data continues to miss, they may refrain from signalling a change in monetary policy three months forward," she said in a note to clients.

Investors awaited more US data later in the session on Friday, including April industrial production and the University of Michigan's preliminary May reading on consumer sentiment.

The dollar was treading water after sinking to a nearly five-month low on Thursday against a basket of rival currencies.

The dollar index fell as low as 93.133, its lowest since late January, pressured by a resurgent euro, which scaled a nearly three-month peak of $1.1445 on Thursday. It last stood at $1.1398, down about 0.1% on the day.

Against its Japanese counterpart, the dollar was buying 119.24 yen , slightly up on the day.

Crude oil futures edged down, with US June crude shedding about 0.2% on the day to $59.78 a barrel, after dropping overnight on supply glut fears.

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