Asian Shares Mixed After Dollar Weakens

Asian markets began mixed Friday after the U.S. dollar weakened again overnight, with many countries in the region preparing to celebrate the Lunar New Year holiday next week.

The U.S. dollar index, which tracks the greenback's strength against a basket of global currencies, fell 0.8% to the lowest level in almost four months ahead of U.S. employment data due for release later Friday. Markets are pricing in lower expectations for further rate increases from the U.S. Federal Reserve this year, weakening the dollar and providing a lift to commodities.

"Weak U.S. data has been the trigger for the selling and, in theory, it will force the Fed out of its new cycle," writes IG market strategist Evan Lucas.

Hong Kong's equity markets led the region higher in early trading, with the Hang Seng Index up 1% and the Hang Seng China Enterprises Index, a gauge of Chinese companies with listings in the city, up 1.5%.

The Bank of East Asia rose 8.3% in Hong Kong after hedge fund Elliott Management Corp urged the bank to explore a sale of its business.

With the Japanese yen rising against the dollar to the strongest in more than a year, the Nikkei Stock Average sank 1.1% in morning trading. The dollar last traded at ¥ 116.88.

Mainland Chinese markets barely stirred ahead of next week's weeklong holiday for Lunar New Year and the release of data on the country's foreign reserves due Sunday. The Shanghai Composite was flat, while the smaller Shenzhen market gained 0.1%.

Elsewhere in the region, Korea's Kospi was flat while the Australian S&P/ASX 200 shed 0.7%.

Crude prices rose in Asian trading hours, with Brent gaining 0.6% to $34.65 a barrel, while gold prices eased off recent gains, last down 0.2% to $1,155.40.

Write to Gregor Stuart Hunter at gregor.hunter@wsj.com

(END) Dow Jones Newswires

February 04, 2016 22:35 ET (03:35 GMT)

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