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Asian markets mixed on worries about US inflation

HONG KONG – Asian stock markets were mixed on Friday as investors turned cautious amid worries the U.S. Federal Reserve’s latest move to combat recession in the world’s largest economy will lead to rampant inflation.

Trade was lackluster in most markets, with Tokyo closed for a holiday, as the region closed out one of its strongest weeks this year with a whimper.

Sentiment took a hit after Wall Street’s rally petered out Thursday. In the U.S., investor euphoria over the central bank’s aggressive $1.2 trillion plan to buy government bonds and debt securities gave way to fears the new spending would stoke inflation long term.

Those concerns have pummeled the dollar, which stabilized in Asia but was still headed for a 4 percent loss against the yen this week. That hurts Japan’s big exporters by eroding their foreign income.

While the market may see more upside, continuing woes in the financial system would likely lead to more selling in the weeks ahead, analysts said.

“I don’t think anyone reasonably expects this to be a long-term rally or that we’ve hit bottom,” said Andrew Orchard, Asian strategist for Royal Bank of Scotland in Hong Kong. “The problems with the financial system are still unknown.”

Hong Kong’s Hang Seng Index fell 207.85 points, or 1.6 percent, to 12,923.07, and Australia’s benchmark S&P/ASX 200 stock index declined 0.4 percent to 3,465.8.

Stocks in mainland China rose for a fifth day, with the Shanghai Composite advancing 0.5 percent to 2,277.89. South Korea’s Kospi climbed 0.8 percent to 1,171.04. Trading will reopen in Tokyo on Monday.

Markets in the Philippines and Thailand also rose.

Overnight in the New York, banking and other financial shares dragged on the broader market, and the major indexes finished down. The Dow Jones industrial average fell 85.78, or 1.2 percent, to 7,400.80.

The broader Standard & Poor’s 500 index fell 10.31, or 1.3 percent, to 784.04, while Nasdaq composite index fell 7.74, or 0.5 percent, to 1,483.48.

U.S. futures pointed to more losses on Wall Street. Dow futures were down 63 points, or 0.9 percent, to 7,348, while S&P 500 futures were down 7.4 points, or 1 percent to 772.7.

The dollar recovered some after tumbling overnight, gaining to 94.62 yen from 94.53 yen earlier — but down from nearly 99 yen two days ago. The euro was lower at $1.3652 from $1.3660.

Oil prices eased after surging overnight on a weakened dollar and evidence that OPEC has significantly slowed production. Benchmark crude for April delivery was down 49 cents at $51.12.