Asian shares slip, dollar close to eight-month peak

Reuters: Asian shares struggled on Tuesday after a healthcare mega-merger failed to impress Wall Street, while the dollar took a breather from its run to eight-month highs on rising conviction that the Federal Reserve will raise interest rates next month.

The mood was expected to carry over into European trading. Financial spreadbetters predicted Britain’s FTSE 100 would open down by as much as 0.4%, Germany’s DAX would fall as much as 0.4%, and France’s CAC 40 was seen dropping 0.5%.

MSCI’s broadest index of Asia-Pacific shares outside Japan wavered in and out of positive territory, and was last down 0.2%.

Japan’s Nikkei ended a choppy session with a 0.2% gain, after a long weekend. Markets were closed for a national holiday on Monday.

“We’re post Japan Inc earnings now and the focus is back on China where local brokers are talking about market reforms, many of which have direct market impacts, which is important because China is a policy-driven market,” said Gavin Parry, managing director of Parry International Trading.

“There’s also a continued focus on the US Federal Reserve, with a lot of sell-side banter about quantifying what level of rate increase brokers are expecting,” he said.

Chinese shares wilted, with the blue chip CSI300 index  of the largest listed companies in Shanghai and Shenzhen off session lows but still down 0.2%, while and the Shanghai Composite Index  edged down 0.1%.

On Monday, Wall Street marked modest losses as Pfizer’s plan to buy Allergan Plc in a $160 billion deal quickly drew criticism from politicians as a tax dodge.

“Investors may feel that even if this deal comes through, this will become the last of this sort,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset.

Markets showed no immediate reaction to a worldwide travel alert issued by the US State Department that warned US citizens of the risks of travelling because of what it described as “increased terrorist threats.”