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The greenback was 0.3% higher against a basket of major currencies while 10-year US Treasury yields rose 4 basis points from Thursday's New York close to over 2.95%, also dragging up German Bund yields. World shares edged lower.
Japan's Nikkei business daily, citing unnamed sources, said Summers would be named as the next Fed chairman after the US central bank's policy meeting ending on Sept 18, at which it is expected to start reducing its massive monetary stimulus.
"Because its to do with a Fed appointment, I would want to know more about where they (the Nikkei) got it from," Daiwa Capital Markets' head of economic research Chris Scicluna, said, with other market players also expressing scepticism.
Debate in Washington has focused on whether Obama will pick Summers or Fed Vice Chair Janet Yellen to succeed Ben Bernanke, whose term as head of the US central bank expires in January.
Markets are closely watching the situation because Summers is known to be less enthusiastic about the policy of quantitative easing, which has supported riskier asset markets.
The appointment must be approved by the US Senate, where a Summers nomination is seen a controversial.
World share markets were already heading lower before the Nikkei report as many investors were reluctant to build new positions before the Fed meeting, which is expected to see its bond-buying cut back from a current $85 billion a month.
US retail sales and consumer confidence data due later are unlikely to change those expectations.
Shares slip
The broader FTSEurofirst 300 stock index was down 0.2% in early trading, led by miners after heavy selling of gold linked to expectations of the Fed's stimulus reduction.
MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.8%, pulling further away from a three-month high and on track for a second losing day after a 10-day winning streak - its longest such run in six years.
The Asian gauge is still up 2.2% this week.
In Tokyo, the Nikkei share average bucked the trend and edged up 0.1% on reports the government is considering lowering the corporate tax rate next year as part of efforts to soften the impact of a planned consumption tax hike.
In commodity markets, cash and US gold futures were on course for their worst week since June after heavy selling linked to expectations of the Fed rollback hit New York's COMEX and the Tokyo Commodity Exchange.
"It's just the stop (loss) orders. Obviously people are getting more and more bearish," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo.
Gold fell 3.4% on Thursday, its biggest one-day decline in more than two months, as signs of a diplomatic solution to Syrian crisis, the expectations about the Fed and the firmer dollar took their toll on investor demand.
Brent crude oil inched higher towards $113 a barrel as the United States and Russia worked on a plan for Syria to surrender its chemical weapons, though worries over supply disruptions in Libya and escalating violence in Egypt weighed.
"Since concerns on a possible US-led military strike against Syria have eased, market participants are just waiting for the outcome of next week's Fed meeting," said Masaki Suematsu, Energy team manager at Newedge.
Brent is now up for three straight sessions but the gains do not seem enough to cover two days of heavy losses in the week that wiped nearly $5 off the European benchmark. That put it on track for a nearly 3% weekly drop, its steepest since the week that ended June 21.
