By Hideyuki Sano
TOKYO (Reuters) - Asian markets rode a roller-coaster on Friday, with India's rupee hitting a record low, the yuan at an all-time high and Chinese stocks roiled by a likely trading error.
The jitters across Asia followed a sharp fall in Wall Street shares as signs of improvement in the U.S. job market and rising inflation stoked expectations that the Federal Reserve will reduce its stimulus next month.
In Europe, Britain's FTSE inched up 0.1 percent in early deals, while the German DAX was down 0.1 percent.
The rupee fell to a record low of 62.03 to the dollar on concerns that central bank measures to curb capital outflows would prove insufficient as worries grew about the impact on funds of any rollback of U.S. stimulus.
Chinese shares went on a wild ride, with the Shanghai Composite Index falling 1 percent before surging as much as 5.6 percent before giving up all the gains.
Traders suspected the rough ride was caused by system problems at Everbright Securities <601788.SS>.
China's yuan meanwhile hit a record high against the dollar as weakness in the greenback spurred some traders to cover positions ahead of the weekend.
The currency was trading at 6.1115 per dollar after touching a record high of 6.1090, as a string of solid economic data in China has eased worries about a sharp slowdown.
U.S. Treasury yields held near two-year highs in Asian trade as signs of improvement in the U.S. job market and rising consumer prices cemented expectations that the Federal Reserve will start reducing its stimulus next month.
"I'd say the markets are pricing in an 80 to 90 percent chance that the Fed will announce tapering in September, although I suspect the Fed will try to send a message to curb the rise in bond yields," said Arihiro Nagata, head of foreign bond trading at Sumitomo Mitsui Banking Corp.
In addition, some traders said there might be selling related to rising speculation that U.S. President Barack Obama may nominate former Treasury secretary Lawrence Summers as the successor to Fed chairman Ben Bernanke.
Summers is seen as less dovish than Fed vice chairwoman Janet Yellen, who is considered another strong contender.
The dollar wallowed near a seven-week low, however, as signs of improvement in Europe and elsewhere undercut the perceived relative strength of the U.S. economy, especially in light of some weak U.S. earnings, as well as disappointing factory data.
Also not helping the dollar, other U.S. data showed China and Japan - the two largest foreign holders of U.S. debt - were at the forefront of a $66 billion exodus from long-term US Treasuries in June, dumping a net $40 billion.
ASIAN SHARES FALL
In Asia Tokyo's Nikkei share average fell 0.8 percent while MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent.
The falls were moderate compared to Wall Street, where Standard & Poor's 500 Index shed 1.4 percent, its biggest fall since mid-June to five-week lows.
U.S. shares were pummelled by weak earnings and outlook from Walmart
The euro fetched $1.3350, near double top around $1.34 hit in June and August, and keeping much of its 0.7 percent gain on Thursday.
The dollar also lost momentum against the yen, trading at 97.63 yen, off Thursday's high of 98.66 yen.
As the dollar eased, gold prices hit a two-month high of $1,372.51 while silver also held near three-month high of $23.15 after a surge of more than 5 percent on Thursday.
Copper futures hit a 10-week high on hopes the global economic recovery is taking root.
Brent oil prices held near four-month peaks on fears that escalating violence in Egypt could affect the Suez Canal or spread in the Middle East, where some supplies are already disrupted.
(Additional reporting by Jungmin Jang in Seoul, Clement Tan in Hong Kong and Lu Jianxin in Shanghai; Editing by John Mair, Simon Cameron-Moore and Mark Bendeich)
