Hong Kong: Asian stocks fell on Friday as investors nervously awaited a US jobs report, while the Australian dollar got only a brief lift despite signals from the central bank that interest rates could rise over time.

Bucking the trend: Japan’s Nikkei share index managed to eke out a 0.2% gain though, for its highest close in 10 months. Itsuo Inouye / AP

Australia’s central bank indicated it could pre-empt the world and raise interest rates if its economy continues to improve, giving the the Aussie dollar a brief boost.

“Among industrial nations Australia has higher interest rates. A view that its economy will benefit from demand from China, whose economy is supported by stimulus measures, is making investors tend to flock to the Aussie," said Ayako Sera, a market strategist at Sumitomo Trust and Banking Co. Ltd in Tokyo.

Corporate earnings’ reports out of Asia continued to highlight the impact of global recession and Japanese consumer electronics maker Pioneer Corp. saw its shares dive more than 5% at one stage in Tokyo after posting a quarterly loss.

Japan’s Nikkei share index managed to eke out a 0.2% gain though, for its highest close in 10 months.

Airlines did better than some sectors in the region. Japan Airlines Corp. announced a first quarter loss but its shares slipped just 0.6%. Malaysia Airline System Bhd shares jumped more than 7% at one point as the carrier returned to profit in the second quarter.

The MSCI index of Asia-Pacific stocks outside Japan fell nearly 1.5%, but is still up more than 75% since a rebound in global equities began on 9 March.

A string of improved economic data in the region in the past week has lifted risk appetite but investors are not convinced yet that an economic upturn is sustainable.

Shares in Seoul rose 0.7% but the mood was cautious.

“Continued foreign buying is helping markets today," said Lee Kyung-soo, a market analyst at Shinyoung Securities Co. Ltd in Seoul. “But there are concerns whether corporate earnings growth in the third quarter would be as strong as that seen in the second."

For more evidence of a global recovery, investors are turning their focus to US non-farm payrolls data, which is forecast to show 320,000 jobs were lost in July compared with a loss of 467,000 jobs in June.

Concern that China could rein in the easy money that has fuelled a stellar rally continued to weigh on shares in China and Hong Kong, which saw drops of 2.9% and 2.5% in their respective benchmark indexes.

People’s Bank of China vice-governor Su Ning told a news conference after the Shanghai market closed on Friday that China’s bank lending would slow in the second half, but that monetary policy would remain moderately loose with fine-tuning via market tools.

The monetary policy comments echoed a quarterly central bank report earlier this week that helped to trigger the market’s three-day decline.

“When the market is already this high, it is only understandable that investors believe there will be some monetary tightening instead of ignoring the possibility," said Ben Kwong, chief operating officer with KGI Asia. Indian shares closed 2.3% lower, followed by Singapore’s 2.0% drop.

The dollar edged lower against a basket of currencies as investors awaited US jobs data to gauge the sustainability of a recent risk rally.

Sterling remained under pressure after giving up most of its gains this week when the Bank of England surprised markets by expanding its quantitative easing programme to £175 billion on Thursday. It also fell after Royal Bank of Scotland Group Plc. posted losses during the first half of 2009.

Metals prices retreated for a second day, helping push down Australia’s benchmark S&P/ASX 200 share index by 0.6%, as shares in mining giants BHP Billiton Ltd and Rio Tinto Ltd both dropped more than 2%. Copper prices have doubled this year, thanks to continued Chinese demand, but they could quickly lose momentum if data suggests a global economic recovery may take longer than hoped, analysts said. Shanghai’s benchmark copper prices fell 2% while Malaysian tin fell 2.6% following steep losses on the London Metal Exchange.

Oil prices retreated to around $71 a barrel after reaching six-week high of $72.42 on Thursday.

Kaori Kaneko in Tokyo and Jungyoun Park in Seoul contributed to this story.