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Asia tech shares jump; China property stocks rally on Evergrande payment

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Investors look at screens showing stock information at a brokerage house in Shanghai, China January 16, 2020. REUTERS/Aly Song

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  • Tech shares follow U.S. peers higher on FAANG earnings optimism
  • Evergrande set to avert default after surprise interest payment
  • Energy shares slump with markets bracing for higher inflation

TOKYO, Oct 22 (Reuters) - Tech stocks climbed in Asia on Friday, following U.S. peers higher, while Chinese property stocks rallied following a surprise interest payment by debt-ridden property developer China Evergrande Group.

Meanwhile, energy stocks dragged following a pullback in oil prices overnight, and as coal futures extended losses after Beijing signalled it would intervene to cool surging prices that contributed to the country's electricity shortage.

More broadly, investors have become increasingly concerned that persistent inflation could force central bankers to tighten monetary policy at a point where global economic growth remains fragile.

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Regional bond yields rose with those on U.S. Treasuries, where the market priced in higher inflation expectations by narrowing the spread between short- and long-term yields, and pushing breakeven rates to the highest since 2012.

The dollar held gains from overnight - when it rose the most since the start of last week against major peers - as better jobs data boosted the case for a faster tapering of Federal Reserve stimulus and earlier interest rate hikes.

Japan's Nikkei (.N225) advanced 0.3%, led by technology shares, while energy and basic materials shares were the biggest drags. The broader Topix (.TOPX) ended the day 0.1% higher, with a 0.4% jump in the Topix growth index (.TOPXG) mostly negated by a 0.2% drop for the value index (.TOPXV).

Chinese blue chips (.CSI300) gained 0.7%, with the CSI300 Real Estate Index (.CSI000952) rising 2.1%. Hong Kong's Hang Seng (.HSI) rose 0.1%, as an index tracking Hong Kong-listed mainland developers (.HSMPI) rallied 3.4%.

China Evergrande Group (3333.HK) wired funds to a trustee account on Thursday for a dollar bond interest payment due Sept. 23, a source told Reuters on Friday, days before a deadline that would have plunged the embattled developer into formal default. The stock jumped 3.5%. read more

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged up slightly, keeping it on track for a 1.6% gain this week. That would be a third straight winning week, the longest stretch since early June.

Futures pointed to a higher open in Europe, with FTSE futures indicating a 0.3% rise and DAX futures signaling a 0.3% advance.

By contrast, S&P 500 E-minis futures pointed to a 0.1% drop at the re-open, after the cash index posted a record closing high overnight, led by surging tech shares.

The S&P 500 (.SPX) added 0.3%, while the Nasdaq Composite (.IXIC) rallied 0.6%, although the Dow Jones Industrial Average (.DJI) edged slightly lower.

Next week, almost all the so-called FAANG giants report earnings: Facebook, Apple, Amazon, and Google-owner Alphabet. Netflix (NFLX.O) posted its results on Oct.19, and for the quarter that ended in September, diluted earnings-per-share came in at $3.19, beating analyst expectations of $2.57. read more

"The narrative over the last couple of days has been earnings focused and tech stocks have led the charge," said Kyle Rodda, a market analyst at IG Australia.

"There's momentum there, simple as that."

At the other end, energy shares were the biggest drag on indexes from Tokyo and Sydney to Hong Kong and Shanghai.

Chinese coal prices continued to dive after the government said it would intervene to cool prices to help electricity producers out of a widespread power crunch. read more

Oil prices also fell, with Brent set for its first losing week in seven, and West Texas Intermediate crude down for the first week in nine, following a retreat from multi-year highs reached earlier in the week.

Brent slid 0.7% to $84.03, while WTI dropped 0.6% to $82.03.

"The crude price and energy more broadly has had a pretty good run," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

"I don't think people are giving up on energy necessarily, but I think people are thinking it's time to switch out of what's been a very hot sector."

Meanwhile, yields on benchmark 10-year Treasury notes were at 1.6802%, easing back from a five-month high of 1.7050% reached overnight. Two-year yields at 0.4513% remained close to the overnight high of 0.4560%, a level not seen since March of last year.

The dollar index , which gauges the greenback against six major rivals, edged higher to 93.755 on Friday, adding to the previous session's 0.2% gain.

The index bounced off its lowest this month overnight after data showed the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tighter labor market. read more

The Fed has signaled it could start to taper stimulus as soon as next month, with rate hikes following late next year. Full employment is among the Fed's stated requirements for rates lift-off.

Fed Chair Jerome Powell speaks later on Friday in a panel discussion.

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Editing by Simon Cameron-Moore

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