By Willa Plank

Nikkei up slightly, China stocks fall after a week off

Stock investors again struggled to find a footing Friday, capping a week where some encouraging economic data has been counterbalanced by concern of political risk surrounding the administration of U.S. President Donald Trump.

"Everyone is talking about it ... the U.S. could be moving away from globalization," said Chris Weston, chief market strategist at IG.

But investors know it is going to take time for any effects to appear, Weston added. "We aren't going to see it in economics and statistics for some while," he said. "It isn't causing a shock."

Trading in the U.S. was listless the day before, while Asian stock indexes posted some sizable declines Thursday afternoon amid further weakness in the dollar -- which crimps exporters' earnings -- with the Nikkei, Japan's benchmark stock index, falling 1.2%.

The Nikkei , Japan's benchmark stock index, rose as much as 0.8% early Friday before giving up gains as investors were unenthused by the Bank of Japan's morning bond-purchase announcement. But stocks rebounded after the lunch break as the BOJ offered to buy, at a fixed rate, Japanese government bonds maturing in five to 10 years.

But that stock advance, driven by a pullback in the yen , ultimately faded as well. The Nikkei finished up 3.62 points at 18,918.20 after moving in a 230-point trading range.

Japanese government bonds were also volatile, with the 10-year yield hitting a fresh one-year high of 0.15% in the morning before BOJ's afternoon moves -- which entailed buying Yen723.9 billion ($6.4 billion) of bonds from financial institutions that mature in five to 10 years. The 10-year yield fell back to 0.09% in late trading, and the dollar was around Yen113.05.

Meanwhile, in China, where stock trading resumed after being dark for a week following the Lunar New Year holiday, the central bank tightened liquidity (http://www.marketwatch.com/story/china-tightens-monetary-policy-via-repo-rates-rise-2017-02-03) by lifting open-market rates.

That move "was a little beyond expectation," said BOC International analyst Jacky Zhang.

The Shanghai Composite Index fell 0.6% as fresh data Friday showed a slowdown in Chinese manufacturing growth last month.

The declines in China filtered to Hong Kong, where equities also felt pressure from the Nikkei Hong Kong Purchasing Managers' Index falling to 49.9 in January from 50.3 in December. That report showed the city's private-sector economy broadly stagnant at the start of the year, index compiler IHS Markit said.The Hang Seng Index was down 0.4% ahead of the close. Australia's S&P/ASX 200 finished down that much, while Korea's Kospi rose 0.1%.

(END) Dow Jones Newswires

February 03, 2017 03:37 ET (08:37 GMT)

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