 "Asian shares erase gains, dollar gains as Yellen revives rate talk")
Asian shares gave up early gains on Friday, while the dollar firmed after Federal Reserve Chair Janet Yellen suggested the central bank is still on track to raise interest rates later this year.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.4%, on track for a weekly loss of nearly 5%.
Australian shares also fell 0.4%, in a week when markets were roiled by a survey showing China's factory activity fell to its weakest since 2009.
"Heading into the end of the week traders and investors are weary and still concerned about China and the ongoing Fed lift-off conversation," said Chris Conway, head of research, Australian Stock Report.
Japan's Nikkei stock index erased a rise of over 1% and was 0.1% lower at the end of morning trade, poised to lose 2.8% in a holiday-shortened two-day trading week.
Data released before the open showed Japan's core consumer prices marked the first annual drop since the central bank deployed its massive stimulus programme more than two years ago.
Japan's government also cut its economic assessment and highlighted external risks posed by China and a US interest rate hike.
Yellen, speaking a week after the Fed delayed a long-anticipated rate hike, said she and other Fed policymakers do not expect recent global economic and financial market developments to significantly affect the central bank's policy.
"We doubt Fed officials will have enough new information to start tightening at the October meeting if they were not prepared to act last week, but we expect they will be moving in December," said Jim O'Sullivan, chief US economist at High Frequency Economics.
"Implicitly, the drag from global forces is being offset by domestic strength," he said in a note to clients.
Yellen struggled to finish a speech at the University of Massachusetts at Amherst due to dehydration, for which she received medical attention.
The Fed chair later attended a dinner event as planned, a university spokesman said.
The euro fell about 0.5% to $1.1172 from around $1.1230, while the dollar was up around 0.1% at 120.15 yen, from around 120.00 yen before Yellen's speech.
The dollar index, which tracks the US currency against a basket of six major counterparts, was up 0.3% at 96.282.
Federal fund futures contracts for January fell to as low as 99.735 in price, pricing in more than 50% chance of a rate hike by the end of this year, before erasing losses.
US stock futures were off earlier highs but were still up 0.1%, suggesting calmer trading later in the global session.
Stocks around the world fell for a fifth day on Thursday, sliding towards two-year lows as worries lingered over global economic growth and Volkswagen's emissions test scandal rattled European carmakers.
The Brazilian real bounced back sharply after hitting a record low of 4.2482 to the dollar, after the head of the Brazilian central bank vowed to use all instruments in its arsenal to curtail the real's collapse.
The real last stood at 3.9363 per dollar, rising 6.1% on the day.
In commodities trade, crude oil futures held on to overnight gains after rising as much as 1% after an estimate of inventory draws at a key US delivery hub. US crude was up 0.1% at $44.96 a barrel, while Brent was slightly up at $48.19.
