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Asian shares retreated after an 11-day winning streak as concerns grew over a deadlock in US budget negotiations, while a survey showed Japanese manufacturers are more pessimistic than expected.
The MSCI Asia Pacific index shed 0.3 per cent with Japan’s Nikkei 225 Stock Average off 0.5 per cent ahead of Sunday’s election, South Korea’s Kospi down 0.7 per cent and Australia’s S&P/ASX 200 up 0.1 per cent.
Sentiment was dampened by a lack of progress in US budget talks, with less than three weeks until the December 31 deadline before a mix of spending cuts and tax increases start taking effect, potentially tilting the US economy back into recession. House Speaker John Boehner said on Thursday, after meeting President Barack Obama for an hour, that the president’s budget proposals are not balanced.
The Japanese stock market was hit by profit-taking after rising 12.4 per cent since mid-November, when the election was called. The opposition Liberal Democratic party is widely expected to win Sunday’s poll, which analysts predict will lead to aggressive monetary easing.
But sentiment was hurt by the Bank of Japan’s quarterly Tankan survey, which showed the lowest reading since March 2010. Tankan, which tracks the sentiment of large manufacturers, fell to minus 12 in December, from minus three in the last survey in September.
The data suggested that any recovery “could come even later than the central bank is currently envisaging”, Crédit Agricole said in a research note.
Panasonic slid 1.7 per cent as the electronics maker faced a second straight annual loss.
In Seoul, Samsung Electronics lost 1.2 per cent on profit-taking after closing at a record-high on Thursday. In Sydney, APN News & Media plunged 7.9 per cent after the newspaper publisher forecast lower second-half revenue.
Chinese shares were boosted by stronger manufacturing data. The Shanghai Composite Index rallied 1.7 per cent while Hong Kong’s Hang Seng index advanced 0.4 per cent, after HSBC released the preliminary version of its December manufacturing Purchasing Managers’ Index survey, which came in at a 14-month high of 50.9.
In currency markets, the yen was steady around its lowest level since late March, trading at Y86.68 against the dollar. It was trading at Y109.40 per euro, slightly above an eight-month low of Y109.55.
In commodities markets, US crude futures gained 0.6 per cent to $86.36 a barrel, bouncing back from Thursday’s fall. Spot gold was steady near $1,696 an ounce after falling 1 per cent in the previous session.
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