Asian shares, euro fall but dollar rallies

Hong Kong - Asian shares and the euro slipped on Friday while the dollar hit its highest level against the yen since the financial crisis after the European Central Bank unveiled a fresh round of measures to fight off deflation.

With the ECB announcement sending investors scurrying out of the euro, the dollar was the main beneficiary, while analysts said the dollar could rise further if a US jobs market report later in the day shows further improvement.

However, after a broadly healthy run-up in equities this week profit-takers tempered buying sentiment, while Wall Street also provided another soft lead.

Tokyo gave up initial advances that were fuelled by the weak yen to end slightly lower, dipping 7.50 points to 15 668.68. Sydney lost 32.6 points to close at 5 598.7 and Seoul eased 6.85 points to 2 049.41.

Hong Kong retreated 0.23% to 25 240.15.

However, Shanghai rose 0.85% to 2 326.43 as investors bet on government measures to boost the economy following a weak batch of recent data.

ECB policymakers cut interest rates on Thursday to 0.05% from 0.15%. They also cut the deposit rate to minus 0.2% from minus 0.1%, meaning lenders would have to pay more to keep their cash at the central bank.

READ: ECB cuts rates to repel deflation threat

The move is aimed at boosting lending to businesses and consumers in order to kick-start the economy and fend off deflation.

Bank chief Mario Draghi also unveiled plans to buy asset-backed securities (ABS) to help boost lending in the region, as well as a programme to purchase covered bonds.

The decision showed the bank's leaders understood that "they were running out of time", said Boris Schlossberg, managing director at BK Asset Management.

"They realised that the situation is pretty severe," he added. "They simply can not do nothing, they have to do some kind of reaction to stimulate demand."

Focus on US jobs data

The news immediately hit the euro, which sank below $1.30 on Thursday for the first time since July 2013. It ended the day in New York at $1.2945.

However, it slipped further in Tokyo Friday, buying $1.2939. It also fetched ¥136.28, down from ¥136.22 in New York and well down from the ¥137.85 earlier on Thursday in Asia.

Euro-aversion had a knock-on effect for the dollar, which jumped to ¥105.69 in Asia on Friday - its highest level since October 2008 - before edging back to ¥105.32 in the afternoon.

Adding to dollar strength is an expectation the Fed will bring forward an interest rate hike as the US economy picks up pace, while Bank of Japan chiefs consider further easing measures as they struggle with tepid growth.

Eyes are now on the release of US jobs data later on Friday, which could have a bearing on Fed policy.

On Wall Street the three main indexes ended lower, despite the more accommodative policy from the ECB.

The Dow eased 0.05%, while the S&P 500 slipped 0.15% and the Nasdaq lost 0.22%.

Oil prices were mixed. US benchmark West Texas Intermediate for October delivery rose 30 cents to $94.75 while Brent crude for October delivery rose 19c to $102.02.

Gold was at $1 265.46 an ounce in afternoon European trade, from $1 269.92 late on Thursday.

In other markets:

- Taipei fell 20.95 points to 9 407.94.

Smartphone maker HTC shed 2.22% to Tw$132.0 while Taiwan Semiconductor Manufacturing was 0.39% lower at Tw$127.0.

- Wellington rose 25.32 points to 5 253.87.

Fletcher Building was up 0.11% at NZ$9.25 and Contact Energy added 2.20% to NZ$5.57.

- Manila added 0.83% to 7 263.58.

Philippine Long Distance Telephone shed 1.10% to 38 pesos while Bank of the Philippine Islands gained 0.32% to 0.30 pesos.

- Singapore closed down 4.61 points to 3 341.73.

Oil rig maker Keppel fell 0.18% to Sg$10.83 while Singapore Telecommunications eased 0.51% to Sg$3.91.

- Kuala Lumpur ended flat at 1 868.46.

Financial firm CIMB Group Holdings slipped 0.7% to 7.23 ringgit, while plantation conglomerate IOI gained 0.4% to 4.81 ringgit.

- Jakarta closed up 12.01 points at 5 217.34.

Bank Negara Indonesia climbed 1.78% to 5 725 rupiah, while Hero Supermarket lost 1.00% at 2 475 rupiah.

- Bangkok added 4.59 points to 1 584.32.

Bangchak Petroleum lost 1.43% to 34.50 baht, while Siam Cement rose 2.28% to 448.00 baht.

- Mumbai retreated 59.23 points to 27 026.70.

Jaiprakash Associates fell 10.34% to 330.80 rupees, while Jaypee Infratech lost 7.23% to 26.95 rupees.