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Asian stocks tentative amid Fed stimulus cut fears

By JOE McDONALD

BEIJING (AP) a¿¿ Asian stock markets mostly posted tentative gains Friday as investors prepared for the U.S. Federal Reserve's decision next week on whether to reduce its monetary stimulus. Oil prices edged up, staying above $97 per barrel.

Asia's heavyweight market benchmark, Tokyo's Nikkei 225, rose 0.4 percent to 15,404.59 and Hong Kong, Taiwan and Sydney also rose. Shanghai was unchanged.

Markets declined in smaller economies including Indonesia, Singapore and Thailand that might be more exposed if a reduction in the Fed's stimulus hurts U.S. demand for imports or sparks short-term capital flight from Asian economies.

"The unwinding of unconventional monetary policy is a good thing long term. However it will cause short-term vibrations," said Evan Lucas, a strategist for Australia's IG Markets, in a report.

Hong Kong's Hang Seng rose 0.2 percent to 23,271.96. Taiwan's Taiex added 0.2 percent to 8,378.68 and Sydney's S&P ASX 200 gained 0.5 percent to 5,089.70. China's benchmark Shanghai Composite Index was unchanged at 2,203.15.

Strong U.S. retail sales and signs of an imminent budget agreement in Congress have reinforced expectations that the Federal Open Market Committee meeting on Dec. 17-18 might decide to start reducing its $85 billion worth of monthly financial asset purchases.

That prompted selling in Asian economies that might see U.S. demand for imports weaken in the event stimulus is wound down.

Seoul's Kospi shed 0.5 percent to 1,958.82. Singapore, Thailand, Malaysia and Manila also fell by margins of 0.2 to 0.4 percent.

The U.S. stimulus has buoyed stocks over the past few years, and its potential reduction has jolted markets in recent months. However, any tapering is expected to be accompanied by a renewed commitment by the Fed to keep interest rates low. That, analysts say, helps explain why stock markets are still trading at relative highs and why bond markets aren't too volatile.

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