TOKYO (Reuters) - Asian stocks and the euro dipped on Thursday as markets erred on the side of caution over the ongoing Greek debt negotiations amid conflicting headlines on progress in the talks.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent. South Korea's Kospi lost 0.2 per cent. Japan's Nikkei bucked the trend and gained 1.6 per cent thanks to a significantly weaker yen.
CNBC reported late on Wednesday that an agreement in principle was in place between Greece and other euro zone governments, lifting risk appetite briefly. Luxembourg's finance minister also said his euro zone counterparts agreed on a way forward to deal with Greece's financing problems.
Still, the situation appears far from clear with Reuters reporting that there was no deal yet and a Greek government official insisting there could be no extension of the bailout.
Investors awaited a European Council meeting later on Thursday to gauge whether in fact the debt negotiations were moving forward.
"The logic of each side demands negotiating until the very last minute as the only way to ensure that the most is achieved. Of course, the nature of the brinkmanship exercise risks a miscalculation that sends both over the abyss," strategists at Brown Brothers Harriman wrote in a note to clients.
Risk asset markets also had to keep an eye on geopolitical developments as France, Germany, Russia and Ukraine began peace talks in Belarus as pro-Moscow separatists tightened the pressure on Ukraine in some of the war's worst fighting.
In currencies, the euro had an early dip as the market tried to digest the conflicting Greek headlines, slipped 0.2 percent to US$1.1311 from a high of US$1.1353.
The US dollar held within striking distance of a five-week peak of 120.48 reached on the back of higher U.S. Treasury yields.
Crude oil posted a modest bounce after sliding sharply the previous day after U.S. stockpiles hit record highs.
U.S. crude was up 0.9 per cent at US$49.26 a barrel after dropping as much as 3 per cent overnight.