* Asian stocks struggle to extend gains
* Fed cheer gives way to caution ahead of Chinese data on
* Selloff in dollar eases somewhat
By Ian Chua
SYDNEY, July 12 Investors in Asian stocks turned
cautious on Friday even after a record closing high on Wall
Street, and a selloff in the dollar paused as markets braced for
Chinese GDP data that could give telling evidence of weakness
in the world's second biggest economy.
Economists polled by Reuters see China's second-quarter GDP
growth at a median 7.5 percent. The data is set to be released
Foreshadowing an even slower growth rate, China's finance
minister said he expected a 7 percent pace for this year, which
would be below the government's own official forecast.
"China's weak foreign trade data for June provide a
pessimistic edge to second quarter GDP estimates. Monthly data,
including industrial production and fixed investment, show
China's economy slowed further in the second quarter," said
Alaistair Chan, an economist at Moody's analytics in Sydney.
"This year is shaping up to be the slowest since 1999, and
the risk is increasing that full-year GDP growth will come in
below the government's 7.5 percent target."
Confirmation of any further weakness in China's economy
would dampen risk appetite.
MSCI's broadest index of Asia-Pacific shares outside Japan
crept up a tepid 0.2 percent, losing steam after
three straight sessions of solid gains.
It was, however, on track to end up more than 3 percent on
the week, its best since September.
Tokyo's Nikkei was flat, South Korea's KOSPI
eased 0.5 percent, Hong Kong's Hang Seng slipped 0.2
percent and China's mainland shares shed 0.5 percent.
Bucking the region's weaker trend, Australia's ASX 200 index
climbed 0.5 percent, thanks mostly to strength in the
major miners such as BHP Billiton.
The generally lacklustre performance on Asian bourses came
after a powerful rise on Thursday and followed a record closing
high for the U.S. S&P 500 index and Dow Jones.
Investors had cheered Federal Reserve Chairman Ben
Bernanke's commitment to keep monetary policy accommodative for
the foreseeable future.
Before his comments, markets had started to price in the
prospect of the Fed scaling back its bond-buying programme as
early as September following a string of encouraging data that
underscored a clear recovery in the economy.
Currency markets were steadier following a breathtaking
selloff in the dollar in the past 24 hours as investors cut
bullish positions on Bernanke's pledge.
The dollar index, which tracks the greenback's
performance against a basket of major currencies, wallowed at
2-1/2 week lows, having slumped more than 2 percent. That fall
was the steepest in four years, and normally only seen during
The euro jumped as far as $1.3208, well off this
week's trough of $1.2755. It has since retreated to $1.3093, but
was still around 2 percent higher on the week.
Analysts at BNP Paribas said the fall in the dollar should
be seen as an opportunity to buy because they still expect the
Fed to begin winding down its stimulus later this year.
"We forecast an acceleration of U.S. GDP growth in Q3 and Q4
that is consistent with the Fed starting its tapering process in
the second half of 2013," Steven Saywell wrote in a report.
"We choose to recommend a short GBP/USD at 1.5130, targeting
a move to 1.45 with a stop at 1.5310," said Saywell, adding he
believed the Bank of England would ease policy in August.
Caution ahead of the Chinese data saw commodity currencies
such as the Australian dollar give back much of the recent gains
made against the greenback.
The Aussie slipped to $0.9166 from Thursday's high
of $0.9306, keeping in sight a 34-month trough of $0.9036 set
earlier this month.
The Aussie's decline came even as commodity markets were
bolstered by Bernanke's commitment to keep policy loose. Copper
was a touch softer on the day at $6,976 a tonne, having
jumped 2.6 percent, while gold stood at $1,284 an ounce
after a 1.7 percent rally.
Oil lost a bit of momentum as traders took profits on a
three-week rally that lifted prices to 15-month highs. U.S.
crude eased back to around $105 a barrel, having reached