Asian markets headed into the weekend on a cautious note Friday ahead of a key speech by Federal Reserve boss Jerome Powell, while the pound held the previous day's rally fuelled by rekindled hopes for a soft Brexit.
After a positive start to the week sparked by China-US trade hopes, investors have taken a wait-and-see approach ahead of Powell's address, which will be parsed for an idea about the central bank's plans for monetary policy.
There are hopes he will outline further cuts to borrowing costs, having done so last month for the first time since the financial crisis, but with the US economy in much better health than most others, analysts warn there could be some disappointment.
"One thing to reiterate going into tonight's speech is that markets seem very clearly positioned for some very dovish guidance from Mr Powell on US interest rates," said Jeffrey Halley, senior market analyst at OANDA.
"It is a dangerous assumption to make and the corrections across various asset classes if he disappoints could make for a very emotional finish to the week's trading session."
That was a sentiment reiterated by New York Mellon chief strategist Alicia Levine, who pointed out that minutes from the Fed's July meeting showed policymakers were split on the way forward owing to recent upbeat data on the economy.
"The markets want more than the Fed is going to give here," she told Bloomberg TV.
- Sterling holds gains -
Still, Asia's main indexes were in positive territory in the morning. Tokyo went into the break 0.2 percent higher, while Hong Kong added 0.2 percent, Shanghai gained 0.1 percent and Sydney rose 0.3 percent.
However, Singapore, Seoul, Taipei and Wellington were all in the red, with Manila more than one percent lower.
The tentative performance followed a soft lead from Wall Street, with traders taking note of another inversion of the US Treasury market -- when the return on 10-year notes fell below that of two-year notes, which is seen as a sign of a possible recession.
On currency markets, high-yielding, riskier units were broadly lower as traders move into the relative safety of the dollar.
The pound dipped but was sitting around three-week highs after French President Emmanuel Macron echoed German Chancellor Angela Merkel in allowing Britain to find a solution to the Irish border that has dogged negotiations since 2017.
Ahead of the G7 summit in Biarritz, France this weekend, Prime Minister Boris Johnson met the leaders to reach an agreement that averts a damaging hard Brexit on October 31.
"The market has seized on these comments as a positive development, showing a will to negotiate," Roy Attrill at National Australia Bank said in a note.
Sterling has been under constant pressure this year as a hard EU divorce has grown increasingly likely as MPs rejected former premier Theresa May's exit plan, then hardline Brexiter Johnson replaced her in July.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: UP 0.2 percent at 20,672.86 (break)
Hong Kong - Hang Seng: UP 0.2 percent at 26,104.22
Shanghai - Composite: UP 0.1 percent at 2,887.72
Pound/dollar: DOWN at $1.2244 from $1.2253 at 2040 GMT
Euro/dollar: DOWN at $1.1078 from $1.1086
Euro/pound: UP at 90.48 pence from 90.44 pence
Dollar/yen: UP at 106.57 yen from 106.42 yen
West Texas Intermediate: UP 10 cents at $55.45 per barrel
Brent North Sea crude: UP 14 cents at $60.06 per barrel
New York - Dow: UP 0.2 percent at 26,252.24 (close)
London - FTSE 100: DOWN 1.1 percent at 7,128.18 (close)