SINGAPORE: Asian shares were dragged lower by losses in China on Friday and in the absence of guidance from Wall Street, which was closed for the Thanksgiving holiday, while the dollar stayed on the back foot and Treasury yields climbed a touch.
The holiday lull is likely to extend to Europe, with EUROSTOXX 50 futures mostly flat. Both S&P 500 futures and Nasdaq futures were also little changed.
In geopolitical news, Israel and Hamas started a four-day ceasefire on Friday. The militants are set to release 13 Israeli women and child hostages later in the day and aid will flow into the besieged Gaza enclave, the first pause in the near seven-week-old war.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6% but are still headed for a weekly gain of 0.8%. It is up about 7% in November as investors grew increasingly confident that U.S. rates have peaked, with discussion shifting to the timing and speed of rate cuts.
Japan's markets returned from a holiday, with the Nikkei climbing 0.7% to charge towards a 33-year high hit on Monday.
Data on Friday showed that Japan's core consumer inflation picked up slightly in October, although by less than expected, and factory activity shrank for a sixth month.
Chinese bluechips fell 0.7% while Hong Kong's Hang Seng index tumbled 1.4%, reversing the previous day's hefty gains. Chinese developers listed in Hong Kong lost 2%, after jumping 6.4% on Thursday on more support measures from Beijing to prop up their beleaguered industry.
"Since share markets rebounded so quickly, they became technically overbought, so it's quite possible we go through a period of consolidation," said Shane Oliver, chief economist at AMP.
"You get the talk of the so-called Santa rally, but often times Santa rally doesn't really occur in the last two weeks of December. So we could have a couple of weeks with the markets sort of just meandering around and lacking direction."
Overnight, U.S. markets were closed for the holiday. In Europe, slightly better than expected euro zone PMIs nudged the euro and shares higher and Sweden's crown dropped as its central bank left rates on hold.
Minutes of the European Central Bank October policy meeting showed euro zone inflation was falling as expected, or even a bit faster, but suggested policymakers needed to keep the possibility of an interest rate hike on the table.
Cash Treasuries fell a little as they resumed trading in Asia, with two-year Treasury yields up 3 basis points to 4.9419% and benchmark ten-year yields up 4 bps to 4.4606%.
In the currency markets, moves were mostly muted. The dollar index < =USD>, which measures the U.S. currency with six peers, was on the back foot at 103.71, nearing a three month low of 103.17.
The sterling perched near a 2-1/2 month top at $1.2540, as strong results from a business survey led markets to push back bets on when the first Bank of England rate cut might come.
Oil prices extended losses after tumbling more than 1% on concerns over the delayed OPEC+ meeting. Brent crude futures fell 0.2% to $81.26 a barrel.
Gold prices was 0.1% higher at $1,993.63 per ounce. - Reuters
