Asian Shares Edge Lower, Eye on Corporate Results

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October 26, 2012 2:53 PM EST

Asian shares edged lower on Friday as investors kept a wary eye on corporate earnings results under way.

The MSCI index of Asia-Pacific shares outside Japan was down 0.2 percent. Australian shares held steady, drawing support from a rise in iron ore prices to a 3-month high.

South Korean shares opened down 0.4 percent. Before trading began, Samsung Electronics, the world's largest electronics company and accounting for about 15 percent of Korea's benchmark KOSPI index, reported record quarterly profit of $7.4 billion on Friday.

Samsung's results came just hours after Apple Inc, the most valuable public company in the United States, which posted quarterly earnings that fell short of expectations.

In a sign how worries over a possible sharp tightening in the U.S. federal budget are already weighing on the economy, data showed on Thursday U.S. business investment may be stalling in September. But another report suggested a slowly healing labour market as the number of Americans filing for initial jobless claims fell last week.

In Asia, Bank of China Ltd on Thursday posted its biggest quarterly profit gain in a year after cutting back on bad-loan provisions, which prompted concerns that it may face a cash crunch if more borrowers default as the economy worsens.

The deterioration in the euro zone economy, hit hard by the region's prolonged debt crisis, and shrinking global demand has hit Asian exporters.

South Korea's economy grew by 0.2 percent in the July-September period from the previous three-month period, the slowest quarterly growth since the fourth quarter of 2009 in Asia's fourth-largest economy. The median forecast called for a 0.1 percent expansion.

Japan's Nikkei average opened almost flat.

The dollar rose to a fresh four-month high of 80.38 yen early in Asia on Friday on expectations the Bank of Japan will take aggressive easing measures at its policy meeting on October 30.

Japan's core consumer prices fell for the fifth straight month in the year to September, showing the economy remained mired in deflation and keeping pressure on the central bank to do more to achieve its inflation target.

"The (dollar/yen) move may have further to run leading into Tuesday's BOJ announcement. But we believe that lower U.S. yields eventually, and a BOJ falling short on action, will see USD/JPY back lower," Kiran Kowshik, a strategist at BNP Paribas wrote in a client note.

The euro was steady at $1.2933, close to a near two-week low of $1.29205 seen on Wednesday.

Markets' next key focus is the advanced reading of U.S. third-quarter gross domestic product due later on Friday, with the annualised rate of growth in the world's largest economy seen at 1.9 percent.

U.S. crude futures steadied at $86.06 a barrel and Brent crude futures were nearly unchanged at $108.53.

Sentiment improved in Asian credit markets, tightening the spread on the iTraxx Asia ex-Japan investment-grade index by two basis points early on Friday.

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