Asian shares gain, Mueller report hits dollar

Asian shares clawed back most of their weekly loss after rising firmly on Friday as strong Wall Street earnings and a step forward on U.S. tax reform brightened the mood, though many hurdles remain to secure passage of a tax cut deal.

The dollar fell after the Wall Street Journal reported Special Counsel Robert Mueller's team last month subpoenaed President Donald Trump's campaign for documents containing specified Russian keywords from more than a dozen officials. "The noose is tightening, approaching the inner circle," said Marshall Gittler, Cyprusbased chief strategist at ACLS Global.

"What with all of the problems the administration is having pushing its agenda through Congress, this added distraction certainly does not help," he said. "If the administration is occupied with legal problems, it would be unable to help with the reconciliation process in pushing the tax reform bill through."

Futures portended mostly solid openings for markets in Europe, with European stock futures STXEc1 and DAX futures FDXc1 each up 0.1 percent, and CAC futures FCEc1 marginally higher. FTSE futures FFIc1 were down 0.1 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.6 percent in late afternoon trade. But it was down 0.1 percent for the week.

Japan's Nikkei .N225 gained 0.2 percent, extending its recovery from a near three-week intraday low hit. But it was down 1.3 percent for the week, snapping its nine-week gaining streak.

The U.S. House of Representatives approved a broad package of tax cuts sought by Trump, passing its first, if smallest, hurdle and providing a catalyst for fresh buying in risk assets.

The tax debate now moves to the U.S. Senate, where that chamber's separate plan has already encountered resistance from some Republicans. No decisive Senate action is expected until after next week's Thanksgiving holiday on Nov. 23.

Wall Street's main indexes rose sharply, boosted by strong gains in WalMart (WMT.N) and Cisco (CSCO.O) following their earnings.

The S&P 500 . SPX advanced 0.82 percent to turn positive for the week, a day after hitting a three-week low, while the Nasdaq Composite . IXIC added 1.3 percent to a closing record high of 6,793.29.

MSCI's broadest gauge of the world's stock markets .MIWD00000PUS stemmed its five-day losing streak and posted its biggest daily gain in two months, of 0.80 percent. Junk bond prices rebounded sharply, with iShares High Yield Bond ETF (HYG) gaining almost one percent to recoup more than half of its losses since the start of the month.

"The markets had been wary of a fall in credit products during the last few days but it seems we just had a healthy correction. As the European Central Bank and the Bank of Japan are still pumping liquidity, the world's asset markets will be supported," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management. The positive mood on Wall Street helped to lift the yield on two-year U.S. notes US2YT=RR to a nine-year high, with a Fed rate hike in December seen almost as a done deal. Fed funds rates futures are now pricing in about a 90 percent chance of another rate hike by June next year, the highest level in recent months and up from about 50 percent just over a month ago.

The U.S. dollar, however, lost momentum and fell broadly following the media report Mueller issued a subpoena to more than a dozen officials in the Trump administration. The dollar skidded 0.4 percent to 112.57 yen JPY=, hitting its lowest level in almost a month. It was down 0.9 percent for the week against its Japanese counterpart.