Global Markets: Asian shares firm, dollar slumps on ECB's tapering signal

By Lisa Twaronite

TOKYO (Reuters) - Asian shares firmed on Friday, supported by solid Chinese trade data, while the dollar skidded after European Central Bank chief Mario Draghi suggested the central bank may begin tapering its massive stimulus programme this autumn.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5 percent, and was set for a 0.2 percent gain for the week.

China's August exports rose 5.5 percent from a year earlier, slightly missing analysts' forecast of a 6.0 percent increase, while imports grew a robust 13.3 percent, handily beating expectations of 10 percent growth and reinforcing views that the world's second-largest economy is still expanding at a healthy pace despite tighter policy.

Japan's Nikkei stock index was pressured by a stronger yen and slipped 0.4 percent. The index is poised for a 1.8 percent loss for the week.

Australian shares slipped 0.3 percent, hit by weakness in energy and financial sectors, with Commonwealth Bank of Australia coming under renewed pressure as it struggled to shake off a money-laundering scandal that has shattered its reputation.

South Korean shares fell 0.2 percent, as automakers led by market heavyweight Hyundai Motor dropped on worries its Chinese joint venture partner may pull out following the deployment of an anti-missile system that has angered Beijing.

Markets are jittery that Pyongyang could launch another missile test on Saturday, during a North Korean national holiday.

Wall Street ended little changed on Thursday, as investors continued to track Hurricane Irma, which was bearing down on Florida on the heels of devastation in Texas caused by Hurricane Harvey.

Economists said Harvey could weigh on U.S. economic growth for the third quarter, though they did not expect this to delay the U.S. Federal Reserve's announcement of a plan at its meeting this month to start trimming its $4.2 trillion debt portfolio.

The storm caused U.S. initial jobless claims to spike to a two-year high, despite underlying strength in the labour market.

New York Fed President William Dudley said on Thursday the central bank should continue gradually raising rates given low inflation should rebound, sounding slightly less confident than his previous hawkish comments after weak inflation readings.

The benchmark U.S. Treasury yield stood at 2.042 percent in Asian trade, down from its U.S. close of 2.061 percent. It plumbed a 10-month low of 2.03 percent on Thursday.

Besides slumping Treasury yields, the dollar was also pressured by ECB head Draghi's remarks that policymakers would decide on tapering this autumn, and that "probably the bulk of these decisions will be taken in October."

The ECB must take into account the weakening of inflation owing to the strong euro as it prepares to wind down its stimulus, Draghi said, after the central bank kept rates at record lows at its regular policy meeting and confirmed that asset purchases would continue at least until December.

Draghi "talked about the euro, but in terms of volatility. He talked about the strength of the euro having an impact on inflation, but other than saying he's going to watch and monitor it, there wasn't anything to suggest that they're going to do anything about it," said Mitul Kotecha, head of Asia macro strategy for Barclays in Singapore.

If the strengthening currency "had some impact on their tapering plan, that would have been different, but clearly at the moment, it looks like that's not the case," Kotecha said.

The euro was up 0.4 percent at $1.2067 after touching a high of $1.2090, its firmest since January 2015. It was up 1.7 percent for the week.

The dollar fell 0.2 percent against the yen to 108.32, moving back toward a 10-month low of 108.05 touched on Thursday and briefly again on Friday. It was 1.9 percent lower for the week.

Meanwhile, Japanese second quarter GDP released on Friday showed growth was much slower than previously indicated. Wage growth and household spending remain lacklustre despite a tightening job market, keeping the Bank of Japan under pressure to maintain its massive monetary stimulus even as its U.S. and European counterparts contemplate gradual exits.

The dollar index, which tracks the greenback against a basket of six major currencies, was down 0.5 percent at 91.187, after falling as low as 91.082, its weakest since January 2015, putting it on track for a 1.8 percent weekly loss.

The Australian dollar rose 0.8 percent to $0.8103, scaling its highest peaks since May 2015.

China's yuan strengthened further against the U.S. dollar to its strongest in nearly 21 months.

Crude oil futures firmed, with Brent crude gaining 0.4 percent to $54.70 a barrel, while U.S. crude edged up 0.2 percent to $49.21 per barrel.

On Thursday, global crude oil benchmarks diverged, with Brent rising to a 5-1/2 month high. But U.S. crude slipped on a bigger-than expected stock build, as the restart of U.S. refiners after Hurricane Harvey was countered by the threat of Hurricane Irma.

(Editing by Shri Navaratnam and Jacqueline Wong)