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Fed uncertainty hits Asia markets, rupee at new low

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(Globalpost/GlobalPost)

India's rupee sank to another record low on Thursday as emerging Asian currencies retreated after US Federal Reserve minutes failed to provide clarity about the future of its stimulus programme.

While traders remain in sell mode on expectations the bank will soon pull the plug on its bond-buying, they were lifted by data showing Chinese manufacturing expanded for the first time in four years this month.

The rupee dived to 65.04 against the dollar as worries about the Fed cash were compounded by growing fears about the state of the Indian economy.

Indonesia's rupiah was at 10,787 to the dollar -- a four-year low but a slight improvement on the 10,945 seen Wednesday -- while the Thai baht slipped to 32.09 from Thursday's 31.77.

In share trading Mumbai's Sensex was down 0.14 percent, Jakarta down 2.28 percent, and Kuala Lumpur was 1.73 percent lower.

Manila was down more than six percent as it played catch-up with this week's losses after being closed for the past three days. Bangkok shed 1.87 percent.

Investors were left none the wiser about the Fed's plans for its $85 billion a month stimulus known as quantitative easing (QE), which has fuelled an investment splurge in emerging Asia over the past year.

Some board members believed that "it might soon be time to slow somewhat the pace" of the bond purchases, aimed at holding interest rates down, minutes of its July meeting released Wednesday showed.

But others highlighted "the importance of being patient", revealing concerns about whether the economy will pick up pace as expected in the second half of this year.

Fed chief Ben Bernanke has said QE will remain in place until the US economy can stand on its own feet.

Asian market traders reacted initially with a heavy sell-off but early losses were clawed back.

Tokyo closed down 0.44 percent, Seoul shed 0.98 percent and Sydney ended off 0.48 percent. Hong Kong fell 0.68 percent by the break.

However, Shanghai was up 0.17 percent in response to HSBC's early purchasing managers' index (PMI), which showed growth in Chinese manufacturing.

HSBC said its PMI came in at 50.1 in August, compared with a final reading of 47.7 in July. A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction.

The data comes after recent figures showing a pick-up in Chinese trade and tentatively suggests the under-pressure economy may be about to turn a corner.

It will also provide some respite for regional economies, which rely heavily on China as a source of growth at home.

Against major currencies the dollar stood at 98.20 yen in the afternoon, compared with 97.67 yen in New York Wednesday. The euro bought $1.3335 and 130.97 yen, compared with $1.3358 and 130.46.

On oil markets New York's main contract, West Texas Intermediate (WTI) for delivery in October, slipped two cents to $103.83 in afternoon trade. Brent North Sea crude for October dipped 22 cents to $109.59.

Gold fetched $1,362.20 at 0620 GMT from $1,364.17 late Wednesday.

In other markets:

-- Taipei fell 0.23 percent, or 18.27 points, to 7,814.38.

Hon Hai rose 0.75 percent to Tw$80.7 while computer maker Acer fell 2.28 percent to Tw$19.25.

-- Wellington fell 0.48 percent, or 21.65 points to 4,529.86, with Fletcher Building down 0.34 percent at NZ$8.69 and Telecom Corp off 2.81 percent at NZ$2.25.

-- Dow Jones Newswires contributed to this report --

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http://www.globalpost.com/dispatch/news/afp/130822/fed-uncertainty-hits-asia-markets-rupee-at-new-low