Asian shares dip but hold weekly gains

By Lisa Twaronite and Nichola Saminather

TOKYO/SINGAPORE (Reuters) - Asian shares took their cue from Wall Street and slipped on Friday, but were still on track for gains in a week marked by the first U.S. interest rate hike in nearly a decade and a depreciating yuan.

The divergence between U.S. and other countries' policies is already expanding, with Taiwan's central bank unexpectedly cutting interest rates for the second time this year on Thursday. The bank also said it would keep monetary policy loose to shore up growth in the island's trade-dependent economy as the global demand outlook worsened.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4 percent, but still on track to log a 1.6 percent rise for the week.

Taiwan stocks slipped 0.6 percent, shrinking gains for the week to 1.9 percent. The Taiwan dollar strengthened to T$32.889 versus its previous close of T$33.035 after the central bank said it would maintain an orderly foreign exchange market.

"The global macro dynamics from the beginning of a Fed rate hiking cycle are slowly playing out across the world," Angus Nicholson, market analyst at IG in Melbourne, said in a note to clients.

"In the direct wake of the decision we have seen some dramatic moves in central bank policy with Taiwan cutting its benchmark interest rate, Hong Kong and Mexico both hiking rates, and Argentina removing currency controls and devaluing the peso by 30 percent."

Japan's Nikkei edged down about 0.2 percent, poised for a weekly gain of 0.4 percent, as investors awaited the conclusion of the Bank of Japan's two-day meeting expected later in the session.

BOJ policymakers are widely seen holding off on expanding the bank's massive stimulus programme.

Ahead of the policy review, the dollar slipped about 0.1 percent against the Japanese currency to 122.46 yen, and was up over 1.2 percent for the week.

Forward markets expect most emerging market currencies, which declined after the Fed's decision to hike rates, to weaken even further next year.

One-year non-deliverable forwards show currencies including the Indonesian rupiah, Indian rupee, the Malaysian ringgit and the Thai baht weakening.

The dollar index, which tracks the greenback against a basket of six rivals, edged down about 0.3 percent to 99.968, after jumping 1.2 percent on Thursday, its biggest rise in over a month. It's up about 1.4 percent for the week.

China's yuan strengthened on Friday after 10 straight sessions of weakness against the dollar through Thursday, the longest weakening streak on record, after the central bank guided the Chinese currency lower.

The People's Bank of China set the midpoint rate at 6.4814 per dollar prior to market open, compared with the previous fix of 6.4757. The spot market opened at 6.4870 per dollar, and was changing hands at 6.4832 at 0306 GMT, up from the previous close of 6.4837.

The euro was up about 0.2 percent $1.0841, but down more than 1.3 percent for the week.

Wall Street drooped on Thursday as crude oil futures continued to wallow at multi-year lows against a backdrop of oversupply as well as a stronger dollar following the U.S. Federal Reserve's widely anticipated tightening on Wednesday.

U.S. crude futures continued to slip in Asian trading, down 0.2 percent at $34.89 a barrel.

Brent ended trade on Thursday less than $1 above its 2004 low of $36.40. It recovered on Friday, rising 0.1 percent to $37.10.

Gold edged up slightly from Thursday, when it suffered its biggest slide in five months after the Fed's rate hike.

Spot gold rose 0.3 percent, after tumbling 2 percent on Thursday, and is down 1.9 percent for the week in its worst weekly performance in six weeks.

(Reporting by Lisa Twaronite and Nichola Saminather; Editing by Eric Meijer)