- POSTED: 10 Dec 2013 18:45
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Asian markets fell on Tuesday after a top official at the US Federal Reserve said the bank might announce a small cut in its stimulus programme next week.
HONG KONG - Asian markets fell on Tuesday after a top official at the US Federal Reserve said the bank might announce a small cut in its stimulus programme next week.
With a string of upbeat US data pointing to a pick-up in the economy and boosting confidence, the Japanese yen -- considered a haven during uncertainty -- came under pressure against the dollar and euro as investors seek out higher-yielding, "riskier" assets.
Tokyo eased 0.25 percent, or 38.90 points, to 15,611.31, Sydney was almost unchanged, edging down 0.8 point to 5,143.6 and Seoul gave up 0.35 percent, or 6.93 points, to end at 1,993.45.
Shanghai closed flat, edging down 0.71 point to 2,237.49 while Hong Kong lost 0.28 percent, or 66.98 points, to end at 23,744.19 after China released a mixed set of data showing growth in industrial output slowing while retail sales picked up speed.
James Bullard, the president of the Fed's St. Louis branch, said on Monday that "a small taper" of the bank's US$85 billion a month bond-buying scheme could be on the cards at its December 17-18 policy meeting.
He said "the probability of a reduction in the pace of asset purchases has increased" with evidence of accelerating job gains and the likelihood those advances will continue.
His comments came after the government last week said the unemployment rate had slipped to 7.0 percent in November from 7.3 percent in October, while a healthy 203,000 jobs were created -- more than expected.
Days earlier Washington said the economy grew 3.6 percent in the July-September quarter, well above the 3.0 percent predicted by analysts.
The positive numbers have spurred expectations of a "taper" to the stimulus after the Fed had indicated on several occasions it would only do so when the economy showed it was strong enough to stand on its own two feet.
In New York the Dow edged up 0.03 percent, the S&P 500 advanced 0.18 percent to a new record high and the Nasdaq added 0.15 percent.
However, Kengo Suzuki, forex strategist at Mizuho Securities, said: "It's still hard to tell when the Fed may begin its roll-back."
He added that he still only saw a small chance of the Fed trimming its measures beginning in December. "I'd say there's a 10 percent chance the Fed will begin tapering in December, a 50 percent chance it will do so in January and a 40 percent chance in March."
The brighter outlook in the US economy, along with strong Chinese trade data at the weekend, has boosted confidence, which in turn has pushed the US dollar and euro higher.
The dollar bought 103.10 yen in afternoon Tokyo trade, compared with 103.28 yen in New York on Monday and hovering just below its five-year highs.
The euro sat at US$1.3749, against US$1.3737 in New York. It also fetched 141.90 yen, up from 141.89 yen in New York -- levels not seen since late 2008.
On oil markets, New York's main contract, West Texas Intermediate for January delivery, was up 42 cents at US$97.76 a barrel in afternoon trade, while Brent North Sea crude for January rose 31 cents to US$109.70.
Gold fetched US$1,247.49 per ounce at 0820 GMT compared with US$1,228.36 on Monday.
In other markets:
-- Taipei was flat, edging down 1.23 point to 8,443.39.
-- Manila gave up 2.04 percent, or 122.54 points, to finish at 5,886.40.
-- Jakarta closed up 1.46 percent, or 61.34 points, at 4,275.68.
-- Singapore closed down 1.03 percent, or 31.92 points, at 3,081.72.
-- Kuala Lumpur gained 0.11 percent, or 1.98 points, to 1,843.85.
-- Bangkok was shut for a public holiday.
-- Mumbai fell 0.33 percent or 71.16 points to 21,255.36.