TOKYO: Asian shares eased after hitting a 17-month high on Thursday, while the dollar was steady as investors kept caution before US nonfarm payrolls data later in the week for hints on the greenback's direction. Commodities came off the boil, dragged lower after China's central bank took steps to tighten monetary policy and soak up money from the financial system. Industrial metals bore the brunt of commodities selling, which saw Shanghai copper erase a near 5 percent gain and steel futures hit their downside limit. The weakness also extended into oil, which reversed early gains to trade half a percent lower, and gold also retreated. The Australian dollar pared some of its gains hurt by profit taking after jumping to a 15-month high against the yen and a two-year peak against the euro on the strong retail sales data, which added to the chances of another rise in interest rates as early as February. China's central bank surprise hike in the auction yield of its three-month bills for the first time since mid-August prompted high-yielding currencies such as the Australian dollar to come off intraday peaks. "If China were to show a clearer stance toward liquidity tightening in coming months, there is a possibility that market players would link it to the yuan's revaluation and raise worries about commodity and share prices," said Jun Kato, senior chief analyst at Shinkin Central Bank Research Institute. The US dollar jumped against the yen after new Japanese Finance Minister Naoto Kan said he wanted the yen to weaken more. The dollar surged toward 93 yen, up from about 92.20 yen just before Kan's comments reached the market. Many investors are turning their focus to US non-farm payrolls data due out on Friday to wait for trading direction. The rate of job losses at US private employers slowed in December to 84,000 from 145,000 in November but still exceeded the 72,000 expected by economists. "Investors are waiting for the US jobs report on Friday but the current climate of the market is one of investors willing to take risk," said Tomohiro Nishida, treasury department manager at Chuo Mitsui Trust and Banking. Speaking in Shanghai, James Bullard, president of the St. Louis Federal Reserve Bank, said the market in the United States is improving and the economy is close to the point when the unemployment rate will start to fall. He also said house prices were stabilising, and that housing starts were likely to steady and cease to be a drag on growth. Australian stocks fell 0.5 per cent, as surprisingly strong retail sales data stoked expectations for an interest rate rise next month, weighing on rate sensitive stocks such as banks. Japan's Nikkei average lost 0.5 per cent, with electronics heavyweight Canon hit by a brokerage downgrade and ailing Japan Airlines Corp tumbling on a report that it was set to post a $13.3 billion net loss. South Korea's KOSPI index fell 1.3 percent as tech exporters were hit by the strong won. Samsung Electronics, riding a strong price recovery in its memory chips business and benefiting from booming flat screen TV sales, issued estimates that signal a promising year for consumer electronics. Its shares were off more than 3 per cent after rising to a record ahead of the news. The MSCI Index of Asia Pacific stocks outside Japan, which has been trading at 17-month highs all this week, edged down 0.7 per cent, its first down day since December 21. Hong Kong shares also eased 0.7 per cent from a one-month high as investors took profit, while Chinese stocks dropped after China's central bank tightened its grip on liquidity. The Shanghai Composite shed 1.9 per cent, with debutant China National Chemical Engineering kicking off a year of busy China IPOs with a weak debut. Shares in Taiwan fell more than 1 per cent, while India and Singapore lost about half as much. Gold slipped to $1,130 an ounce after reaching a three-week high above $1,140 the previous day, weighed down by investors' caution ahead of the US jobs data.

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