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Global Markets: Asia stocks retreat from one-month high as Fed tempers rally

Reuters  |  TOKYO 

By Shinichi Saoshiro

(Reuters) - Asian stocks pulled back from a one-month high on Friday as the Federal Reserve looked set to deliver another interest rate hike next month, paring gains made earlier this week after U.S. midterm elections triggered a global equities rally.

Spreadbetters expected European stocks to follow Asia's lead and open lower, with Britain's FTSE losing 0.45 percent, Germany's DAX slipping 0.3 percent and France's CAC dipping 0.15 percent.

MSCI's broadest index of shares outside fell 1.3 percent and was headed for a loss of more than 1 percent for the week. On Thursday, the index hit its highest level since Oct. 8.

Hong Kong's Hang Seng lost 2.4 percent and the Shanghai Composite Index fell 1.2 percent.

Australian stocks slipped 0.1 percent, South Korea's edged down 0.05 percent and Japan's Nikkei shed 1.05 percent.

The Fed held interest rates steady on Thursday but remained on track to continue gradually raising borrowing costs, pointing to healthy economic prospects that were marred only by a dip in the growth of business investment.

The central has hiked U.S. interest rates three times this year and is widely expected to do so again next month.

The 500 lost 0.25 percent and the Nasdaq shed 0.53 percent on Thursday after the Fed's statement, and were the biggest drag on the as U.S. fell.

Wall Street shares spiked midweek following the U.S. midterm elections, on a relief rally as the vote did not deviate significantly from investor expectations.

"The Fed meeting outcome and its statement did not produce major surprises, but it managed to reinforce views that a rate hike is coming in December and this tempered equities," said Masahiro Ichikawa, at in

"The Fed statement came after a steep surge in equities and gave the markets an opportunity to sell into the rally."

In currency markets, the dollar stood tall after advancing against its peers overnight, buoyed by higher Treasury yields and the Fed's intent to continue tightening monetary policy.

The dollar traded at 113.925 yen after brushing a five-week high of 114.09 overnight.

The euro dipped 0.15 percent to $1.1346 after shedding 0.55 percent the previous day.

The euro's and yen's declined helped the dollar index against a basket of six major currencies gain 0.75 percent on Thursday. It last stood little changed at 96.764.

After the Fed statement, the two-year Treasury yield rose to 2.977 percent, the highest in 10-1/2 years.

China's yuan slipped to an eight-day low of 6.9497 per dollar in onshore trade, highlighting the diverging monetary policy outlooks for and the

The U.S.-trade row also remained in focus.

"will likely maintain a hawkish stance towards China, even though the Republicans lost the House during the midterm elections," wrote Raymond Yeung, ANZ's

struggled near eight-month lows as investors focused on swelling global crude supply, which is increasing faster than many had expected.

The market took stock of record U.S. crude production and signals from Iraq, and that output will grow more quickly than expected in 2019.

U.S. crude futures were down 0.08 percent at $60.62 per barrel after falling to $60.40 the previous day, the lowest since March 14.

Three-month copper on fell 0.5 percent to $6,122.5 a tonne.

Copper fell 2.5 percent this week, poised for its biggest weekly loss since mid-August, pressured by a stronger greenback, which makes it more costly for non-U.S. buyers of dollar-denominated commodities.

(Editing by and Sam Holmes)

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

First Published: Fri, November 09 2018. 12:28 IST
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