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May 29, 2017

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Asian markets mixed as Spain worries cap gains

HONG KONG--Asian markets were mixed on Wednesday with uncertainty over a bailout for struggling Spain keeping traders on edge, but Sydney touched a 14-month high after the previous day's interest rate cut.

The dollar and euro held on to recent gains against the yen on talk of another round of stimulus by the Bank of Japan.

Hong Kong, which was returning after a two-day holiday, rose 0.23 percent, or 47.90 points, to 20,888.28.

Sydney climbed 0.13 percent, or 5.6 points, to 4,438.6 but Tokyo fell 0.45 percent, or 39.18 points, to 8,746.87.

Shanghai and Seoul were closed for public holidays.

With Wall Street unable to provide a spark, regional trade was tepid as investors await policy meetings by the central banks of Europe and Japan as well as closely-watched U.S. jobs figures later in the week.

The eurozone crisis continued to weigh after Spain's Prime Minister Mariano Rajoy said he was not planning to ask for a rescue package any time soon, despite the perilous state of the country's finances and its dangerously high borrowing costs.

Spain, the eurozone's fourth biggest economy, is required to make a formal demand for help in order to trigger the release of eurozone rescue funds and supportive action from the European Central Bank.

Analysts had expected it to formally ask for help within days after last week unveiling an austerity budget widely seen as a precursor to a request.

"There was little to encourage a bounce across the risk spectrum overnight with moderate weakness from U.S. equities alongside easing expectations Spain will imminently seek financial aid," said Melbourne-based Chris Gore, currency analyst at GO Markets in a note, according to Dow Jones Newswires.

In Sydney the S&P/ASX 200 at one point rose 0.49 percent to a 14-month high of 4,454.6 before easing, with traders extending Tuesday's advances after the Reserve Bank of Australia cut interest rates.

"There is also some anticipation of another interest rate cut and it's certainly our view that the RBA will cut again next month," said Macquarie Private Wealth division director Martin Lakos.

However, figures showing the trade deficit had soared to more than US$2 billion in August owing to the slowdown in China tempered risk sentiment.

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