Asian markets rode a roller-coaster on Friday, with India's rupee hitting a record low, the yuan at an all-time high and Chinese stocks roiled by rumours of government support for the market or even a trading error.
The jitters across Asia followed a similarly strange sessionon Wall Street, where normal trading patterns appeared to go outthe window as shares fell, US Treasury yields jumped, gold surged and the dollar tumbled.
The rupee fell to a record low as central bank measures to tighten capital outflows and curb gold imports were seen asunlikely to prop up the currency.
The rupee hit an all-time lowof 62.03 to the dollar.
Chinese shares went on a wild ride, opening weaker beforesurging for no apparent reason, taking the Shanghai CompositeIndex up as much as 5.6 percent and prompting talk that Beijing was planning to announce steps to support the market.
A trading error was also rumoured. Later, the gainsevaporated as quickly as they had appeared, leaving tradersscratching their heads.
China's yuan meanwhile hit a record high againstthe dollar as weakness in the greenback spurred some traders tocover positions ahead of the weekend. The currency was tradingat 6.1115 after touching a record high of 6.1090 at the open.
US Treasury yields in Asian trade held near two-year highs as signs of improvement in the US job market and risingconsumer prices cemented expectations that the Federal Reservewill start reducing its stimulus next month.
The dollar wallowed near a seven-week low, however, as signsof improvement in Europe and elsewhere undercut the perceivedrelative strength of the U.S. economy, especially in light ofsome weak U.S. earnings, as well as disappointing factory data.
Also not helping the dollar, other US data releasedovernight showed China and Japan - the two largest foreignholders of US debt - were at the forefront of a $66 billionexodus from long-term US Treasuries in June, dumping a net $40billion.
European shares are expected to fall, with Britain's FTSE seen falling as much as 0.3 percent and German DAX 0.2 per cent.
"I'd say the markets are pricing in an 80 to 90 percentchance that the Fed will announce tapering in September,although I suspect the Fed will try to send a message to curbthe rise in bond yields," said Arihiro Nagata, head of foreignbond trading at Sumitomo Mitsui Banking Corp.
Tokyo's Nikkei share average fell 0.8 percent whileMSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent.
The falls were moderate compared to Wall Street, whereStandard & Poor's 500 Index shed 1.4 percent, its biggestfall since mid-June to five-week lows.
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