Asian shares rise to two-month highs, dollar gains on US data

Asian shares hit a two-month high on Friday, catching some of Wall Street’s shine after upbeat US price and jobless claims data calmed some concerns about the strength of the US economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4%, on track for a robust weekly gain of 2.2%.

Japan’s Nikkei stock index was up 1.4%, but still poised to shed about 0.5% for the week.

Wall Street logged solid gains overnight, after the number of Americans filing new applications for unemployment benefits fell back to a 42-year low last week. That suggested the labour market remained strong even though recent jobs data have sent mixed signals.

Also out overnight, the core consumer price index, which excludes food and energy costs, gained 0.2% in September after ticking up 0.1% in August, reviving some bets that the US Federal Reserve will deliver its first interest rate hike since 2006 as early as this year.

The Fed held policy steady last month, and expressed concerns that the slowing global economy, particularly in China, might pose a threat to the US economic outlook.

Rekindled rate-hike expectations lifted the dollar. The dollar index, which gauges the greenback against a basket of six major counterparts, was up 0.2% at 94.512, but still on track for a weekly loss of about 0.3%.

The greenback also gained 0.2% against the yen, buying 119.11 yen after pulling away from a 7-week trough of 118.065 struck overnight. The US currency was still poised to lose 1% this week.

“It is doubtful the market tried to factor in the possibility of the Fed raising rates this year on the inflation number, but the Fed is ‘data dependent’ so it reacts positively to upbeat data,” said Shinichiro Kadota, chief Japan forex strategist at Barclays in Tokyo.

But bets maintaining that the Fed will not raise rates until next year helped keep gold close to a 3 1/2 month high hit Thursday, and on track for its biggest weekly jump in four weeks.

Spot gold was steady at $1,179.40 an ounce, after jumping to $1,190.63 in the previous session.

Investors remained cautious ahead of China’s latest economic growth data scheduled to be released on Monday.

Growth in the world’s second-largest economy is expected to slow to 6.5% in the third quarter, falling below 7% for the first time since the global financial crisis.

“China’s economy is growing fast - though not as fast as analysts and investors would like - and that is all you need to know,” Carl Weinberg, chief economist at High Frequency Economics, said in a note to clients on Friday.

China’s CSI300 index gained 1.1%, set to end the week 5.6% higher.

Markets also await September eurozone inflation data, due Friday, with expectations that an early estimate of prices contracting 0.1% will be confirmed.

The latest survey of over 60 economists showed eurozone inflation was expected to average 0.1% this year, rise to 1.1% in 2016 and further to 1.6% in 2017 - still much lower than the European Central Bank’s near 2% target.

The euro was steady at $1.1376, having slid from a 7-week peak of $1.1495 scaled the previous day after ECB’s Nowotny said it was “obvious” the central bank must seek more ways to stimulate the euro zone economy. The common currency was on track to end the week effectively flat.

Oil prices reversed overnight losses seen when the US government reported a larger-than-expected crude stockpile build.

US crude was up 0.5% at $46.88 a barrel, after shedding 0.6% on Thursday. Brent added 0.4% to $50.12.