Shares weaken on growth concerns, China data eyed

Shares in Asia's developed stock markets dipped and the dollar struggled at 16-month lows on Friday as disappointing US data and a likely pickup in Chinese inflation gave market players an excuse to take profits after a recent sharp rally.

Asian stock markets are set to snap three consecutive weeks of gains as spiralling commodity prices stoked worries about a broader pickup in inflation within the region even as traders waited for Chinese data later in the day.

Unofficial reports say inflation will be a shade higher than originally forecast at 5.3-5.4%, triggering concerns that more aggressive policy action may be needed to prevent the economy overheating.

Stock markets in Australia and South Korea slipped, with shares in Seoul weakening after hitting a fresh closing high the previous session.

"The market overshot and profit-taking moves are expected," said Yoo Kyung-ha, a market analyst at Dongbu Securities.

Stocks in Japan were largely flat with trade turning volatile and thin in recent sessions before the earnings season as many firms are poised not to give forecasts for the business year in the wake of the triple disaster that struck in March.

Outside Japan, stocks treaded water after hitting a three-year high on Monday.

As inflationary pressures showed signs of rearing their ugly heads, a spike in US jobless claims data also raised concerns that the U.S. economy's growth prospects may be dimming.

Stocks have sagged lately even as a Reuters poll of economists showed 2011 gross domestic product forecasts fell to 2.9% from 3.1%.

In currency markets, the dollar wallowed at a 16-month trough versus a basket of currencies as the market realised that there is scant chance of the Fed tightening for some time to come given the focus on unemployment rather than on inflation.

Commodities continued their record-breaking rally with spot gold rising to a record high of USD 1,477.96 an ounce while silver hit a 31-year high of USD 42.41 an ounce.