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Gold rebounds from stumble after crossing $4,000 mark

S&P futures stabilise after declines on Thursday

China expands restrictions on sales of rare earths

By Gregor Stuart Hunter

SINGAPORE, Oct 10 (Reuters) - Asian stocks limped

towards the end of the week on a shaky footing on Friday as

declines on Wall Street lingered into early trading, while

commodity markets took a breather after their recent charge

higher.

Regional markets remain on track for one of their best years

in a decade, firmly outstripping gains for U.S. counterparts as

President Donald Trump's package of economic policies and

tariffs prompts a surge of orders across the region to meet

booming demand for AI-linked technology hardware.

The U.S. trading session marked the point where a number of

"well-subscribed, high-momentum trades" including gold, silver,

crypto, and much of the S&P 500 "finally showed signs of

exhaustion," said Chris Weston, head of research at Pepperstone

Group Ltd in Melbourne.

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

fluctuated between gains and losses, last down

0.2% as its gains for the week hung in the balance, after U.S.

stocks ended the previous session with mild declines.

Shares in Hong Kong were down the most, off 1.1%,

while the Australian market slid 0.1% against a backdrop

of volatile commodity markets. In South Korea, stocks

surged 1.7%, extending gains for the region's best-performing

index.

U.S. stock futures found a bottom in Asia, with corporate

earnings season for the third quarter due to kick off on Wall

Street next week. S&P 500 e-minis were up 0.2%, while the

U.S. dollar index, which measures the greenback's

strength against a basket of six currencies, held steady near a

two-month high at 99.37.

The yield on the benchmark 10-year Treasury bond

fell to 4.1384% compared with its U.S. close of 4.148% on

Thursday.

Traders' expectations that the Federal Reserve will ease

policy at its meeting on October 29 remain solid, with Fed funds

futures pricing a 94.1% probability of a 25-basis-point rate

cut, according to the CME Group's FedWatch tool.

TAKAICHI WALKS A TIGHTROPE

The Nikkei stock index tumbled 0.7%, taking a step

back after sharp gains this week including on Thursday when it

swept to an all-time closing high.

Data earlier in the day showed wholesale prices rose 2.7% in

the year to September, in a sign of persistent cost pressure

that will keep markets braced for a possible rate hike by the

Bank of Japan when it meets on October 30.

The dollar slid 0.1% against the yen to 152.96,

around the weakest level for the Japanese currency since

February, after the new ruling party leader Sanae Takaichi said

on Thursday that the country's central bank is responsible for

setting monetary policy but that any decision it makes must

align with the government's goal.

Traders say her pledge to reassert government sway over the

central bank may face a reality check from a weak yen and

domestic political considerations, however.

"The market expects the Japanese government to adopt

expansionary fiscal policies," analysts from Bank of America

wrote in a research report. "However, considerable uncertainty

remains about the specifics of the policies up for debate, as

well as the extent of the fiscal expansion."

COMMODITIES IN FOCUS

Gold edged down, extending declines after snapping a

four-day winning streak on Thursday, shortly after breaching the

$4,000 mark for the first time and with evidence of the

ebullience spilling across into other precious metals. Spot gold

was last trading down 0.1% at $3,971.93 per ounce, while

silver was up 1% at $49.62, retesting the $50 mark after

crossing above the boundary for the first time on Thursday.

Chinese stocks tumbled following declines for ETFs

tracking large-caps on Wall Street overnight after Beijing

expanded its rare earths export controls on Thursday, tightening

control over the sector ahead of talks between Presidents Trump

and Xi Jinping.

In energy markets, Brent crude edged up 0.1% to

$65.27 per barrel, after Israel's government ratified a

ceasefire with the Palestinian militant group Hamas on Friday,

clearing the way to suspend hostilities in Gaza within 24 hours

and free Israeli hostages held there shortly after that.