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Nikkei retreats from record high, yen gains after BOJ

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Wall St futures flat after record closes

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Investors await Trump-Xi call

(Updates prices before European open)

By Stella Qiu

SYDNEY, Sept 19 (Reuters) - Asian shares were headed for

weekly gains on Friday on hopes of further rate cuts around the

world, while the Nikkei retreated from record highs after the

Bank of Japan flagged a further unwinding of its massive

stimulus policies.

European stocks were headed for a flat open, with

EUROSTOXX 50 futures little changed. Both S&P 500

futures and Nasdaq futures were flat after Wall

Street closed at record highs overnight.

On Friday, the BOJ maintained

short-term interest rates

at 0.5%, as widely expected, but two members voted for a

hike. It also decided to start selling its vast holdings of

exchange-traded funds (ETF) and real-estate investment trusts

(REIT).

Data showed Japan's core inflation ran at 2.7% in the

year to August, marking the slowest pace in nine months,

although it was still above the central bank's 2% target.

The surprise voting dissent and asset sales caught stock

investors off guard. The Nikkei, which hit a record high

in early trade, reversed gains and was last down 0.3%, trimming

its weekly gain to 0.9%.

The dollar lost 0.3% to 147.51 yen. The

10-year Japanese Government Bond yield jumped 4

basis points (bps) to 1.635%, just short of this month's high of

1.64%, a level not previously seen since July 2008.

"While the majority still favour a steady path, the

presence of two board members voting against today's decision

suggests the debate is tilting toward quicker normalisation,"

said Charu Chanana, chief investment strategist at Saxo.

"That's a structural headwind for broad indices like

TOPIX/Nikkei, though the impact depends on the pace and

signalling of sales."

The focus now falls on BOJ Governor Kazuo Ueda's news

conference, scheduled for 0630 GMT.

Earlier in the week, central banks in

the United States

,

Canada

and

Norway

cut interest rates, fanning hopes of more policy easing to

come and brightening the outlook for global economy, while the

Bank of England

held steady.

South Korea's benchmark share index lost 0.7% but

still hovered near a record level. It was up 1.3% for the week,

bringing the total gain over the past two weeks to over 7%.

MSCI's broadest index of Asia-Pacific shares outside Japan

was off 0.2% but still looked set for a weekly

rise of 0.6%, hovering not far from its four-year tops.

Friday is also the day when stock options, index options and

stock index futures all expire on the same day, leading to

increased trading activity and potential market volatility.

Chinese blue chips inched up 0.6%, while Hong

Kong's Hang Seng slipped 0.1% ahead of an expected phone

call later in the day between President Donald Trump and his

Chinese counterpart Xi Jinping.

There is a lot for investors to consider leading into

that call, with a deal on TikTok possibly close, China's Huawei

outlining its chip plans, and Beijing ordering tech firms not to

buy Nvidia's ( NVDA ) AI chips.

Overnight, benchmark S&P 500, the Dow and the Nasdaq all

closed at record highs, helped by better jobless claims data and

news that Nvidia ( NVDA ) will invest $5 billion in the

struggling U.S. chipmaker Intel ( INTC ).

Intel ( INTC ) shares surged 23%, while Nvidia ( NVDA ) gained 3.5%.

In foreign exchange markets, the dollar rebounded after the

Fed's first rate cut in nine months. The dollar index

held at 97.38, finding some support after plunging to a

multi-year low of 96.224 on Wednesday.

The pound held losses at $1.3546, having slid 0.6%

overnight as the BOE kept rates unchanged at 4%.

In the bond market, 10-year Treasury yields rose

2 basis points to 4.1216%, up for the third straight session.

In commodity markets, oil prices eased on worries about fuel

demand in the United States. U.S. crude slipped 0.3% to

$63.38 a barrel, while Brent was off 0.2% at $67.32.

Spot gold prices rose 0.4% to $3,658 an ounce.

(Editing by Sam Holmes and Kim Coghill)