HONG KONG, Sept 30, 2021 (BSS/AFP) - Asian markets mostly rose Thursday
after the previous day's retreat, though investors continue to fret that
surging inflation will lead to interest rate hikes, while the debt stand-off
in Washington and prospect of a historic US default was also fraying nerves.

   The Dow and S&P 500 provided a positive lead, though the unconvincing end
to the trading day on Wall Street indicated lingering uncertainty on trading
floors.

   While expected for most of the year, the prospect that the Federal Reserve
and other major central banks will soon begin to remove the ultra-loose
monetary policies they put in place at the start of the pandemic has dampened
sentiment in recent weeks.

   The planned moves come as officials look to keep a lid on inflation, which
has soared this year on the back of economic reopenings but has been more
persistent than many predicted owing to supply chain problems.

   Concerns that banks will have to tighten policy quicker and sooner than
hoped come as the global economic recovery shows signs of a slowdown, with a
spike in Covid infections dragging on sentiment among consumers.

   "Growth has clearly hit an air pocket here with concerns about Covid, with
the drama going on in Washington right now, the Chinese property sector that
has sent tremors to global markets," Christopher Smart, at Barings, told
Bloomberg TV.

   "Having said that, the general trajectory of the global economy remains
very much where it was earlier this year."

   Data showed China's factory activity contracted in September for the first
time since February 2020 as the country faces an energy crunch that has led
to power outages.

   While there was little major reaction, analysts warned the problem
remained a cause for global concern as it could exacerbate the supply chain
crisis and add to inflationary pressures.

   - US debt stand-off -

   Still, Fed boss Jerome Powell told other central bank heads Wednesday that
the inflation problem would eventually taper off.

   "The current inflation spike is really a consequence of supply constraints
meeting very strong demand, and that is all associated with the reopening of
the economy -- which is a process that will have a beginning, a middle and an
end," he told a virtual panel including the bosses of the European Central
Bank, Bank of Japan and Bank of England.

   "It's very difficult to say how big the effects will be in the meantime,
or how long they will last, but we do expect that we'll get back, we'll get
through that."

   In early Asian trade, Shanghai, Sydney, Seoul, Singapore, Wellington,
Taipei, Manila and Jakarta all rose.

   But Hong Kong slipped after a three-day gain and Tokyo retreated after a
recent rally to three-decade highs.

   Traders are also having to deal with a range of other issues, including
China's crackdown on private industries, the potential collapse of its
property colossus Evergrande, and US haggling over the debt ceiling.

   Republicans have blocked Democrat moves to lift the borrowing limit and
with Treasury Secretary Janet Yellen warning the government will run out of
cash to meet its obligations on October 18 the race is on to avert what many
say could be a catastrophic default.

   Observers say that while the row is merely political brinkmanship, the
fact that the deadline was so close was making waves on trading floors.

   The row comes as Democrats also struggle to push through President Joe
Biden's multi-trillion-dollar infrastructure and social spending bills.

   - Key figures around 0230 GMT -

   Tokyo - Nikkei 225: DOWN 0.4 percent at 29,439.37 (break)

   Hong Kong - Hang Seng Index: DOWN 0.8 percent at 24,466.65

   Shanghai - Composite: UP 0.5 percent at 3,553.80

   Dollar/yen: DOWN at 111.83 yen from 111.98 yen at 2100 GMT

   Euro/dollar: UP at $1.1609 from $1.1604

   Pound/dollar: UP at $1.3452 from $1.3419

   Euro/pound: DOWN at 86.29 pence from 86.38 pence

   West Texas Intermediate: DOWN 0.2 percent at $74.69 per barrel

   Brent North Sea crude: DOWN 0.3 percent at $78.40 per barrel

   New York - Dow: UP 0.3 percent at 34,390.72 (close)

   London - FTSE 100: UP 1.1 percent at 7,108.16 (close).