US dollar rises amid volatile commodities

The US dollar rose on Friday, on track to post a second week of gains, with commodity prices remaining highly volatile, a factor that continues to weigh on Asian stocks.

US crude fell more than a dollar, sliding further below USD 100 a barrel on concerns over global oil demand as US drivers face rising pump prices and China battles inflation.

The Bank of Korea's surprising decision to hold rates steady triggered a fresh round of dollar buying, and Asian equity traders were expected to be cautious about taking big positions before the weekend after two precipitous routs in the commodity markets in the past week.

Japan's Nikkei was largely flat with the yen's strength holding back equity gains while Australia's benchmark index was up 0.1%.

MSCI's index of Asia Pacific shares outside Japan was slightly higher, though gains were kept in check by a decline in South Korean stocks.

On Thursday, markets spent little time in agonising over Beijing's latest round of policy tightening after data this week showed inflationary pressures remained strong, though the timing caught some market participants by surprise.

After market hours, China lifted bank reserve requirement ratios by 50 basis points, its eight since last October, forcing main Chinese banks to withhold more money from the economy in a bid to cool inflation pressures.

In currency markets, the euro was down 0.4% to USD 1.4188, within sight of a six-week low hit overnight, with lingering fears about Greece's debt problems acting like a weight around the euro's neck.

Nevertheless, the European Central Bank's April interest rate rise was "certainly not" a one-off move as inflation risks in the euro zone have increased and price pressures are building, ECB policymaker Luc Coene said.

A late rally in equities dealt another blow to safe-haven assets such as US government bonds which were already hurt by a lackluster 30-year Treasury bond auction.

Benchmark 10-year Treasury notes eased slightly, though yields held near 3.23% compared to 3.16% on Wednesday and 3.13% last week.

US crude for June delivery was down USD 1.05 to USD 97.92 a barrel.