* MSCI Asia ex-Japan slips from near highest since Aug 2011
* Dollar/yen hits 2-1/2-year peak as Abe ups pressure on BOJ
* China Dec CPI accelerates, triggering broad market
* European shares seen inching higher
By Chikako Mogi
TOKYO, Jan 11 Asian shares and Brent crude
futures fell on Friday as a pick-up in Chinese inflation
prompted profit-taking, although an improving outlook for global
economies curbed losses, while the yen slid on renewed
expectations for bold monetary easing in Japan.
China's annual consumer inflation rate accelerated to a
seven-month high of 2.5 percent in December on rising food
prices, narrowing the scope for the central bank to boost the
economy by easing monetary policy. The producer price index fell
1.9 percent in December from a year earlier, marking the 10th
consecutive month of declines, but improved from November's 2.2
percent annual drop.
Brent crude futures fell 0.4 percent to $111.50 a
barrel and U.S. crude trimmed earlier rises to trade
nearly flat at 93.86.
"China's inflation was hotter than expected which might add
a little bit of downside risk and some investors may be cashing
in profits," said Ben Le Brun, market analyst at OptionsXpress.
MSCI's broadest index of Asia-Pacific shares outside Japan
eased 0.2 percent, erasing morning gains that
brought the index near its highest level since August 2011 hit
last week. The index looked set to end the week virtually flat
after starting the first week of 2013 with a 2.4 percent jump.
Shanghai shares tumbled 1.3 percent, dragging Hong
Kong shares into negative territory, while Australian
shares ended down 0.3 percent.
"It's not the end of the world. We have been trending in
overbought territory for more than a week anyway, so this higher
headline inflation is a trigger for some profit-taking. We are
in a consolidation phase," said Hong Hao, Bank of Communication
International's chief equity strategist, based in Hong Kong.
Hirokazu Yuihama, a senior strategist at Daiwa Securities in
Tokyo, said the China inflation data offered some positive signs
but, given the market's rapid rally over the past month, it was
probably used as an excuse to book profits.
"The slight pickup in inflation is still well below the 3.5
percent forecast by China, and may also reflect recovery in
consumption," he said, adding that the data was unlikely to
significantly dent an overall trend in improving risk appetite.
Unexpectedly strong Chinese trade data on Thursday buoyed
hopes that demand from the world's second-largest economy will
rise, while cautiously optimistic comments from European Central
Bank President Mario Draghi eased anxiety over the euro zone
European markets will likely sustain optimism. Financial
spread-betters predicted London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX would open as much
as 0.3 percent higher. U.S. stock futures were little
changed, hinting at steady Wall Street start.
EPFR Global noted that equity mutual funds have brought in
$6.8 billion of inflows over the last four business days, with
equity flows exceeding bond flows.
In a sign of some stability, South Korea's central bank held
interest rates steady for a third consecutive month on Friday as
expected, to assess the effect from two cuts last year. However,
the bank also revised down its outlook for South Korea's GDP
growth in 2013 to 2.8 percent from 3.2 percent, which along with
a sharp rise in the won hurt Seoul shares.
ABE FUELS NIKKEI BUYING
Japan's benchmark Nikkei stock average closed up 1.4
percent at a 23-month high as the yen's further slide boosted
exporters. Japanese financial markets will be closed on Monday
for a public holiday.
Prime Minister Shinzo Abe "is seen seriously committed to
making the economy better as he is becoming more detailed, and
investors are feeling it is possible under his government," said
Kyoya Okazawa, head of global equities at BNP Paribas in Tokyo.
Japan's cabinet approved on Friday an economic stimulus
package in the biggest spending boost since the financial crisis
as Abe pursues an ambitious agenda to spur growth and end
The dollar jumped to 89.35 yen, its highest since
June 2010, on strengthening speculation Abe will exert strong
pressure on the Bank of Japan to pursue aggressive easing steps.
Abe said in an interview with the Nikkei newspaper on Friday
that the BOJ should consider maximising employment as a monetary
policy goal to help boost the economy.
The euro surged to 118.58 yen, its highest since
The yen selling gained momentum after data on Friday showed
Japan had logged a current account deficit in November for the
first time in 10 months at 222.4 billion yen ($2.5 billion),
overshooting a 3.5 billion yen deficit forecast.
"Fresh short-term players, who know nothing about Japan and
have never traded the yen before, are now joining the yen
selling, and these fresh faces are responding to headlines,"
said Yunosuke Ikeda, a senior FX strategist at Nomura
The euro was last at $1.3261 after earlier hitting a
one-week high of $1.3280, helped by a smooth first bond
sale of the year from Spain on Thursday, which pushed benchmark
10-year Spanish government bond yields to a 10-month low of 4.90
As the yen fell, Tokyo gold futures rallied to a record high
on Friday to as high as 4,820 yen per gram, exceeding
the previous record of 4,754 yen marked on Sept. 7, 2011.