Asia shares mixed as Fed signals early rate hike

HONG KONG: Asian markets were mixed Thursday despite positive cues from Wall Street, where stocks rallied as US Federal Reserve minutes suggested interest rates may be hiked sooner than expected.

Hong Kong lost 0.75 percent and Shanghai was off 0.40 percent as data from British banking giant HSBC showed China´s manufacturing growth slowed in August, indicating a recovery in the world´s second-largest economy has yet to take hold. Seoul dropped 1.20 percent, but Tokyo gained 0.77 percent and Sydney added 0.42 percent.

The mixed performance in Asian markets came after the Dow Jones Industrial Average closed up 0.35 percent at 16,979.13 on Wednesday.

Minutes from the July 29-30 Fed meeting showed policy makers increasingly at odds over how strong the US labour market is and what that means for inflation -- a key issue in planning rate hikes next year.

The intensifying debate signalled an increased, albeit still measured, level of hawkish sentiment in the Fed that could speed up any rate hike.

Easing fears about the geopolitical crisis in Ukraine has fuelled investor optimism ahead of a speech by the head of the US Federal Reserve.

Slow growth, low interest rates and tepid inflation on both sides of the Atlantic will be in focus when heads of the US and European central banks meet this week in Jackson Hole, Wyoming.

All eyes will focus on Janet Yellen, the Federal Reserve chair, and Mario Draghi, her counterpart at the European Central Bank, with observers looking and listening for signs of what they plan for interest rates.

Yellen is facing calls to begin raising interest rates soon after US measures aimed at stimulating the world´s biggest economy are wound up in October.

Traders were also focused on China as the HSBC preliminary purchasing managers index (PMI), which tracks activity in the country´s factories and workshops, slipped to 50.3 this month.

The figure was down from a final reading of 51.7 in July and was the lowest for three months, the British banking giant said in a statement.

In forex markets, the dollar was at 103.69 yen in early Asian trade, slightly down from 103.76 yen in New York late Wednesday but up from 103.23 yen in Tokyo earlier Wednesday.

The euro fetched $1.3259 and 137.50 yen Thursday against $1.3258 and 137.57 yen in US trade.

In oil markets, US benchmark West Texas Intermediate for October delivery was down four cents to $93.41 while Brent for October eased 18 cents to $102.10.

Gold traded at $1,289.30 an ounce at 0233 GMT compared to $1,294.76 an ounce late Wednesday. (AFP)