Asia stocks head for weekly loss as commodity rout saps confidence

Asian shares edged higher on Friday but remained on track for a weekly loss as lower crude prices kept markets on edge after a broad rout in commodities heightened fears about receding global growth.

A supply glut in oil markets, cooling growth in the world's biggest commodities consumer China and prospects of an interest rate increase in the United States next week have made for a tense trading backdrop across most asset markets.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up about 0.1% in early trading, buoyed by overnight gains on Wall Street but facing a weekly loss over 2%.

 

Japan's Nikkei stock index added 0.4%, but still headed for loss of 1.9% for the week.

The dollar index, which tracks the US unit against a basket of six major rivals, was steady at 97.917. But it was on track for a weekly loss of about 0.4% as investors trimmed dollar-long positions ahead of next week's US Federal Reserve meeting at which the central bank is widely expected to hike interest rates for the first time in nearly a decade.

Fed fund futures place an 85% chance of the Fed raising rates at its December 15-16 meeting. A recent Reuters poll also showed that all but one of 18 brokerages that deal directly with the Fed expect a rate increase.

The euro > was nearly flat at $1.0941 but still up about 0.5% for the week after comments from the European Central Bank's Ewald Nowotny raised doubts about the extent to which US and European monetary policy will diverge.

The dollar added 0.2% against its Japanese counterpart to 121.81 > but was still down more than 1% for the week.

Despite this week's weaker dollar, US crude oil futures continued to slip after their overnight tumble on oversupply fears, shedding 0.4% to $36.62 a barrel, approaching a nearly seven-year low. Brent settled extended its fall in post-settlement trade to mark its lowest since February 2009.

US dollar weakness and lower commodity prices "do not normally come hand in hand as dollar weakness generally drives commodity prices higher but nothing seems to matter more this week than position adjustments," Kathy Lien, managing director at BK Asset Management, wrote in a note to clients.

South Africa's rand, meanwhile, plumbed record lows against the US dollar after the abrupt dismissal of respected Finance Minister Nhlanhla Nene to make room for an ally of President Jacob Zuma.

The rand > sunk as low as 15.4895 against the greenback, and was last at 15.4001.