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Asian stocks hold steady, soft Chinese data taken in stride

People are reflected on an electronic stock indicator of a securities firm in Tokyo, on Sept. 13, 2017.

Shizuo Kambayashi/AP

Asian stocks held steady on Thursday, consolidating after touching their highest in a decade and appeared to take in stride a burst of Chinese data which undershot market expectations.

That took some of the shine off a recent string of indicators from China showing surprisingly robust growth, though many analysts expect the world's second-biggest economy to run at a steady pace.

China's factory output grew 6.0 per cent in August from a year earlier, while fixed-asset investment expanded 7.8 per cent in the first eight months, both well below economists' forecasts, data released on Thursday showed. Retail sales for August also undershot expectations.

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The Australian dollar, often used as a liquid proxy of China-linked trades, was up 0.1 per cent at $0.7995 and little changed from levels prior to the Chinese data release. A strong Australian jobs report helped prop-up the Aussie.

MSCI's broadest index of Asia-Pacific shares outside Japan was effectively flat after rising to its highest since 2007 the day before.

Japan's Nikkei nudged up 0.1 per cent and the broader TOPIX brushed a two-year high as the yen weakened.

Australian shares lost 0.2 per cent while South Korea's KOSPI edged up 0.1 per cent. Shanghai added 0.1 per cent.

Wall Street edged up to a record high on Wednesday with gains in consumer discretionary and energy stocks helping offset losses in technology heavyweight Apple Inc.

The dollar stood tall, lifted as U.S. Treasury yields climbed to 2-1/2-week highs on an ongoing improvement in broader investor risk sentiment.

The dollar index, a measured against a basket of six major currencies, was at 92.489 after touching 92.530 overnight, its highest since Sept. 5. It had slumped to a 2-1/2-year low of 91.011 on Friday, when Hurricane Irma threatened the continental United States and on North Korea concerns.

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Focus returned this week to fundamentals from geopolitical risks and natural disasters, with investors poised for the U.S. consumer price index (CPI) due later in the session and its potential impact on the Federal Reserve's stance on interest rates.

Expectations for the Fed to hike rates again in 2017 have waned amid sluggish U.S. inflation.

"The dollar would be sold if the CPI turns out to be weak but the main focal point is how the stock market reacts to such an outcome," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

"The U.S. financial sector has benefited from the recent rise in yields. Should yields fall on lackluster CPI data, that could be used as a pretext to sell U.S. stocks which have already hit successive record highs."

The dollar set a one-month high of 110.735 yen. So far this week it has gained 2.5 per cent against its Japanese peer, a currency often sought in times of risk aversion.

The euro was down 0.1 per cent at $1.1873 after losing 0.7 per cent the previous day, while sterling was flat at $1.3211 .

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The pound hit a one-year high of $1.3329 on Wednesday following strong domestic inflation data, with the currency market braced for the closely-watched Bank of England (BoE) policy meeting due later on Thursday. It last stood at $1.3204.

The BoE must decide on Thursday how forcefully to phrase the prospects of a first interest rate rise in a decade when it weighs up the need to help Britain's Brexit-bound economy against tackling a jump in inflation.

In commodities, crude oil prices dipped slightly after posting a big surge overnight after the International Energy Agency (IEA) said a global surplus of crude was starting to shrink.

Brent crude futures was down 0.2 per cent at $55.04 per barrel after reaching a five-month peak of $55.21 the previous day.

U.S. crude slipped 0.2 per cent to $49.21 per barrel after rallying 2.2 per cent overnight.

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