Asian markets up as US rate fears recede

Asian markets on Friday tracked a rally on Wall Street after another round of below-par US data doused expectations for a Federal Reserve interest rate hike this month.

Equities globally have suffered during a volatile week as top Fed officials gave conflicting views on the need for tighter monetary policy, fuelling uncertainty across trading floors.

But the chances of a move at next week's policy meeting were diminished Thursday with the release of lacklustre retail sales figures as well as weak readings on industrial output and wholesales inflation.

All three indexes in New York surged more than one percent, which in turn filtered through to Asia, where trade was thinned by public holidays.

Tokyo ended 0.7 percent higher, while Sydney jumped one percent, Singapore added 0.7 percent and Wellington climbed 0.8 percent.

Shanghai, Hong Kong, Seoul, Kuala Lumpur and Taipei were closed for public holidays.

However, in early European trade London dipped 0.3 percent, while Frankfurt and Paris each fell 0.2 percent.

"With nothing in the economic numbers to say US rates should be moving up, and growing signs of losing momentum, expectations have largely diminished toward the Fed doing anything in September," Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand Ltd., said in a note to clients.

"The market is drifting back toward the view they might do nothing for quite a while."

The dollar retreated as the slim likelihood of a rate hike all but disappeared. The greenback slipped to 101.95 yen from 102.10 yen in New York, and well down from the 102.28 yen earlier Thursday in Asia.

High-yielding, riskier currencies also advanced, with the Australian dollar up 0.5 percent against the dollar, while the South Korean won added 0.5 percent and Indonesia's rupiah tacked on 0.2 percent.

There were also healthy gains for Malaysia's ringgit, and the Taiwan and Singapore dollars.

Also on traders' radar next week will be the Bank of Japan's own gathering, which traders will be keenly watching after reports that it is planning to cut interest rates further into negative territory.

The prospect of such a move has battered Japan's banks but analysts remain wary about whether officials will act, having baulked at unveiling any measures in the past.

"Coupled with the lack of confidence in the BoJ and with the Fed's likely sitting tight due to political uncertainty regarding the US presidential election", the dollar is vulnerable against the yen, said OANDA senior trader Stephen Innes. 

- Key figures around 0720 GMT -

Tokyo - Nikkei 225: UP 0.7 percent at 16,519.29 (close)

Sydney: ASX/S&P 200: UP 1.0 percent at 5,292.30 (close)

London - FTSE 100: DOWN 0.2 0.9 percent at 6,712.52

Hong Kong - Hang Seng: Closed for a public holiday

Shanghai - Composite: Closed for public holiday

Dollar/yen: DOWN at 101.95 yen from 102.10 yen late Thursday 

Euro/dollar: DOWN at $1.1234 from $1.1244

Pound/dollar: DOWN at 1.3215 from 1.3240

New York - DOW: UP 1.0 percent at 18,212.48 (close)