GLOBAL MARKETS-Asian shares edge up, dollar pinned near 2-yr low vs euro


By Dominic Lau

TOKYO, Oct 25 (Reuters) - Asian shares edged up on Fridayand the dollar was hemmed in near a two-year low against theeuro on expectations the U.S. Federal Reserve would maintain itsmassive monetary stimulus into 2014.

MSCI's broadest index of Asia-Pacific shares outside Japan added 0.2 percent. The index fell 0.1 percent onThursday as rising Chinese money-market rates countered signs ofa pick-up in manufacturing in the world's second-largesteconomy.

In Tokyo, Nikkei futures fell 0.4 percent, signalling asofter opening for the benchmark.

U.S. S&P E-mini futures were flat in early tradeafter the S&P 500 index had advanced 0.3 percent on solidearnings and expectations that monetary stimulus will be inplace for the foreseeable future after weak data.

U.S. manufacturing output fell for the first time in fouryears and the number of new claims for unemployment benefitsfell less than expected last week. .

The euro was steady at $1.3798, not far from atwo-year high of $1.3826 touched on Thursday and shrugging offdata showing the pace of growth in euro zone businessunexpectedly eased this month.

"The dollar will not rally without Fed tapering expectationsrising again, but we would not chase EUR/USD higher here, asrate compression suggests the pair is unlikely to break muchhigher," Societe Generale analysts wrote in a note, saying theyfavoured Scandinavian and Antipodean currencies into year-end.

"Fed tapering expectations being pushed out into 2014 andfurther ECB easing early next year suggest a favourable policyenvironment for the FX carry trade. Throw in lower volatilityand seasonality effects, and one has the perfect cocktail forthe carry trade."

The Australian dollar held steady at $0.9618, aboutone cent below a 4-1/2 month high of $0.9709 on Wednesday.

Against the yen, the dollar stood at 97.37 yen, astone's throw from a two-week low of 97.15 yen hit on Wednesday.

Gold paused for breath after climbing 1.1 percent onThursday, while U.S. crude prices added 0.1 percent toabout $97.2 a barrel, moving away from a 3-1/2 month low of$95.95 touched in the previous session.

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