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Asia shares edge up on brightening U.S. prospects, BOJ awaited

2014/10/31

 TOKYO (Reuters) - Asian shares ticked higher on Friday on Wall Street's cheer after upbeat U.S. growth data, while the dollar traded around four-week highs against the yen as investors awaited the outcome of the Bank of Japan's monetary policy meeting.

The BOJ is widely expected to maintain its massive asset buying program and its upbeat forecast that inflation will hit its 2 percent target next year, suggesting no further stimulus is on the horizon. The policy decision is expected around 0230-0330 GMT (9.30-10.30 p.m. ET).

But data released early on Friday showed Japan's annual core consumer inflation slowed for a second straight month in September, adding to evidence the BOJ is likely to miss its price goal.

"It is difficult to have a baseline scenario that forecasts anything other than 'no further easing.' Amid the mobilization of Abenomics policy, however, we would now be unsurprised if the BOJ did take some kind of action," strategists at Barclays wrote in a note to clients.

Wall Street surged late in the session on Thursday, after data showed surprisingly strong third-quarter U.S. economic growth as the trade gap narrowed. But domestic demand slipped, hinting at some loss of momentum.

 

The data came a day after the U.S. Federal Reserve surprised markets with an optimistic assessment of the U.S. economy when it announced the end of its monthly bond buying stimulus program.

MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.1 percent in early trade, while Japan's Nikkei stock average (.N225) added 1.2 percent.

Japanese shares also got a lift from news that Japan's Government Pension Investment Fund is poised to approve on Friday allocation targets which aim to raise the portion of Japanese shares to 25 percent of its portfolio from the current target of 12 percent, two government sources said.

But data released before the market showed Japan's jobless rate rose in September and the availability of jobs fell for the first time in more than three years, suggesting the labor market is starting to lose some momentum. Japanese household spending also fell more than expected in September.

Against the yen, the dollar bought 109.26, up about 0.1 percent on the day and not far from Thursday's four-week high of 109.47.

The euro edged down about 0.1 percent to $1.2603.

In commodities trading, spot gold edged up 0.1 percent to $1,199.99 an ounce after plumbing a three-week low of $1,195.70 on Thursday.