Asian markets slip, China rebounds

Asian stocks slipped and commodities paused on Friday after a recent selloff on worries that rising inflation may invite aggressive policy tightening and hurt growth in the world's engines like China and India.

Investors have been reluctant to add positions in emerging markets so far this year, even rotating funds out of high inflation risk economies such as Indonesia and into developed markets such as Japan, on concerns that policy inertia may place authorities behind the curve in fighting price pressures.

The MSCI index of Asia and Pacific shares excluding Japan extended its drop to 0.5%, after falling more than 1.8% on Wednesday, weighed down by selling in sectors such as materials which in turn have buckled due to a selloff in commodities this week.

Hong Kong's Hang Seng index was down 0.53%, at 23,876. However, China's Shanghai Composite rebounded in tentative trade, the index surged 1.4%, at 2,715 led by gains in heavy weight banking and property shares.

Japan's Nikkei Stock Average was down 1.6%, at 10,274 led by losses in mining shares on concerns that China would slow down and halt the economic recovery. Straits Times and Seoul Composite were down 0.6% and 1.7% each. Taiwan Weighted was off 0.3%

Commodities took a breather after a sharp selloff this week, though sentiment remained fragile, on concerns that tighter policy may cool growth and sap demand from resource-hungry Asia.

Chinese consumer prices in December rose 4.6 percent from a year earlier, staying above forecasts of 4.4 percent and raising concerns of more rate hikes in the near term, Thursday's data showed. European markets edged higher on back of recovery in mining shares.

The U.K.'s FTSE 100 was up 0.5% to 5,896, CAC 40 surged 0.5% at 3,985 and DAX was up 0.2%, at 7,036.
ow Jones Industrial Average futures indicated a soft opening in the US.