* Asian shares slip, but still on track for a second week of
* The dollar holds near two-week low vs currency basket
* All eyes on next week's Fed policy meeting
* Brent crude set for biggest weekly fall in three months
By Dominic Lau
TOKYO, Sept 13 Asian shares fell on Friday and
the dollar held to overnight losses against the yen as investors
fretted over not whether but by how much the U.S. Federal
Reserve will cut its monthly stimulus at next week's monetary
The Fed is expected to reduce its $85 billion a month
bond-buying programme at its two-day policy meeting ending on
Sept 18. But recent weaker-than-expected data, including jobs
growth in August and consumer spending and durable goods orders
in July, deepened uncertainty about the extent of reduction.
Underscoring the market's unease, investors overnight first
favoured the U.S. dollar after new U.S. claims for state
unemployment benefits slipped to the lowest level since 2006,
but the dollar then went into reverse after the U.S. Labor
Department attributed much of the decline to computer problems
in two states.
A Reuters poll of economists on Monday found that most now
see the Fed trimming its $85 billion monthly spending on bonds
by about $10 billion, compared with estimates for a $15 billion
reduction in a poll before the jobs report.
The dollar was largely steady at 99.73 yen after
falling to a one-week low of 99.00 yen overnight. Against a
basket of major currencies, the greenback also inched
higher but was still not far from a two-week trough touched on
"While the dollar is exposed in the near term to better risk
sentiment and a pause in the Treasury selloff, we generally do
not like running short U.S. dollar exposure," Societe Generale
said in a note.
"The Fed is moving to exit, and Treasuries will stay bearish
for longer, if not as aggressively, with higher yield set to
support the dollar over the coming months."
CAUTION SET IN
MSCI's broadest index of Asia-Pacific shares outside Japan
shed 0.7 percent, pulling further away from a
three-month high and on track for a second losing day after a
10-day winning streak -- its longest such run in six years. The
Asian gauge is still up 2.3 percent so far this week.
In Tokyo, the Nikkei share average edged down 0.3
percent, breaking below its five-day moving average.
"The market has priced in the possibility that the Fed will
start tapering soon so it should not be negative to the market
unless the Fed blurs the schedule and the size of tapering,"
said Tomochika Kitaoka, a strategist at Mizuho Securities.
"If the Fed leaves the market with uncertainty again, it
could trigger a rise in U.S. yields and a drop in the stock
The Japanese government on Friday upgraded its assessment of
the economy for the seventh time this year on the back of rising
capital expenditure, in another sign that Prime Minister Shinzo
Abe's reflationary policies are boosting growth and suggesting
that the economy can withstand a planned sale tax increase.
Gold gained 0.6 percent after sliding 3.4 percent on
Thursday, its biggest one-day decline in more than two months,
as a sudden price tumble in the futures market added to worries
of falling prices as the Syrian chemical weapons crisis abates.
The U.S. and Russia began talks on Thursday on Moscow's plan
for Syria to surrender its chemical weapons as Damascus formally
applied to join a global poison gas ban, but Secretary of State
John Kerry held fast to the position that the U.S. may still use
military force if diplomacy fails.
Worries over a U.S. military strike against Syria spooked
risk markets two, three weeks ago, sending oil and gold prices
higher and driving equities lower globally.
Brent crude added 0.1 percent to around $112.7 a
barrel on Friday but was still heading for its biggest weekly
drop in three months.