Asian shares hit by Fed taper talk, Tokyo up on weak yen

HONG KONG (AFP) - Asian shares slipped Thursday after minutes from the Federal Reserve's latest meeting showed it was considering winding down its stimulus "in coming months".

But Tokyo rallied as the comments sent the dollar surging against the yen.

The regional decline followed losses on Wall Street as another batch of data provided evidence of an uptick in the US economy, fuelling fears the Fed's bond-buying could be nearing its end.

Tokyo climbed 1.92 per cent, or 289.52 points, to 15,365.60 as the dollar advanced against the yen, hitting a four-month high at one point.

However Sydney eased 0.37 per cent, or 19.4 points, to 5,288.3 and Seoul fell 1.16 per cent, or 23.46 points, to 1,993.78.

Shanghai closed flat, dipping 0.48 points to 2,205.77 after a late rally, while Hong Kong lost 0.51 per cent, or 120.57 points, to end at 23,580.29. The two markets faced added selling pressure after HSBC said growth in Chinese manufacturing activity slowed in November.

Minutes from the Fed's October policy meeting showed board members felt recent economic indicators showed the time was approaching to start cutting down its US$85 billion (S$105 billion) a month bond-buying scheme.

"They generally expected that the data would prove consistent with the committee's outlook for ongoing improvement in labour market conditions and would thus warrant trimming the pace of purchases in coming months," the minutes said.

They reiterated that any such move was contingent on a continued strengthening of the US economy, and stressed that even if the programme was ended the bank was looking at other ways to keep short-term interest rates down.

Traders on Wall Street reacted negatively to the remarks, which came as official data showed stronger than expected retail sales in October as well as a pick-up in business hiring.

The Dow fell 0.41 per cent, the S&P 500 slipped 0.36 per cent and the Nasdaq lost 0.26 per cent.

"The view still is that there is a chance the Fed could taper in December," Michael Woolfolk, senior currency strategist at Bank of New York Mellon, told Dow Jones Newswires.