* Spreadbetters expect European shares to edge down at open
* Nikkei erases losses, but still marks steep weekly tumble
* Draghi's hints at near-term ECB steps pressures euro
By Lisa Twaronite
TOKYO, May 9 Asian shares were mostly down on
Friday as a tense situation in Ukraine made investors cautious,
though markets took a tame Chinese inflation report in their
stride despite the implications for weakening demand in the
region's economic powerhouse.
The euro remained on a shaky footing after tumbling
overnight when European Central Bank President Mario Draghi said
the central bank might act to stem slowing inflation and boost
the euro zone economy.
Financial spreadbetters expected Britain's FTSE 100
to open as much as 0.2 percent lower, Germany's DAX
0.4 percent, and France's CAC 40 0.5 percent.
"When trading starts this morning European equities look set
to reverse some of the gains made in the previous session," said
William Nicholls, a dealer at London Capital Group, in a note to
clients, after Draghi "strengthened stocks but put a banana skin
underneath the heels of the euro."
An outlook upgrade by Standard & Poor's on Portugal to
stable from negative could help sentiment. The move was expected
by some analysts and came after Portugal on Sunday declared it
would exit its three-year 78-billion-euro bailout this month
without a precautionary credit line.
MSCI's broadest index of Asia-Pacific shares outside Japan
was down 0.1 percent, on track for a slight
weekly loss, but off session lows after data showed China's
inflation in April was broadly in line with expectations.
Chinese consumer prices rose 1.8 percent in April from a
year earlier while producer prices fell 2.0 percent. While the
figures were in line with forecasts, it was still the slowest
rise for consumer prices in 18 months as producer deflation
persisted, underscoring sluggish demand.
"In the short term, unless we see some new stimulus or
economic policy, I don't think there will be much flexibility
for strong market performance," said Du Changchun, an analyst at
Northeastern Securities in Shanghai.
The Shanghai Composite Index shed 0.3 percent,
poised to fall 0.8 percent on the week.
Japan's Nikkei stock average erased earlier losses
and ended up 0.3 percent, though it still posted a weekly loss
of 1.8 percent.
DOLLAR INDEX EDGES UP
Markets also kept a wary eye on the Ukraine crisis.
Pro-Moscow separatists in eastern Ukraine ignored Russian
President Vladimir Putin's call to postpone a referendum on
self-rule, declaring they would go ahead on Sunday with a vote
that some fear could lead to war.
U.S. stocks mostly fell on Thursday with the Nasdaq
Composite ending lower for a third straight session, its
longest losing streak since early April. But European shares
climbed 1.1 percent after Draghi raised the prospect
of ECB action.
The euro came off a 2-1/2-year high against the
dollar on Draghi's comments. It was last at $1.3839, marginally
lower on the day, and well off Thursday's high of $1.3992, its
loftiest peak since November 2011.
As Draghi's dovish comments pushed the euro down 0.4 percent
on Thursday against its U.S. counterpart, U.S. Federal Reserve
Chair Janet Yellen did the dollar no favours.
Yellen said in testimony to a Senate panel on Thursday that
the Fed is in no rush to decide the appropriate size of its
balance sheet, but if it ultimately shrinks it to a pre-crisis
size, the process could take the better part of a decade.
"In contrast to Mario Draghi, Janet Yellen provided very
little clarity on monetary policy this week, keeping the
downtrend in yields intact," Kathy Lien, managing director of FX
strategy at BK Asset Management, wrote in a note to clients.
The 10-year U.S. Treasury yield was at 2.608
percent, not far from its U.S. close of 2.602 percent on
The U.S. dollar index, which tracks the greenback
against a basket of six major currencies, added 0.1 percent to
79.449. Against the yen, the dollar rose about 0.1 percent to
In commodities trading, U.S. crude futures were up
about 0.2 percent at $100.42 a barrel, on track to halt a
two-week slide, while Brent crude added about 0.1
percent to $108.13, as traders continued to watch the situation
Spot gold was slightly lower at $1,290.60 an ounce,
down 0.7 percent for the week, its second straight weekly
"Right now, the Ukraine situation is supportive of prices
but data coming from the U.S. continues to be strong and that
could keep investors away and weigh on prices," said Ronald
Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
(Additional reporting by Natalie Thomas in Hong Kong and A.
Ananthalakshmi in Singapore; Editing by Chris Gallagher & Shri