- Asian equity markets are looking to finish a disappointing week on a firmer footing, however a late session selloff is providing little reprieve for the apparent return of investor uncertainty. With about 90 minutes to go in Tokyo trading, Nikkei225 has reversed its initial 1% rally to trade around unchanged levels, on track for a 4% overall weekly decline. Sydney's S&P/ASX fared better with a 0.6% advance, however Korea's Kospi was down 0.3% - also on target to match the Nikkei's 4% weekly slide. Ahead of the US open, front-month S&Ps are slightly higher, up about 0.2% at $915, while benchmark yields are pressured below 3.80% after a strong push to the upside in US hours.

- Retrospective minutes from the May Bank of Japan meeting marked the sole economic event of the session and predictably had little impact on market outlook in the wake of the June meeting on Tuesday. Overall, the minutes revealed ongoing uncertainty about economic conditions, even though May was the first month the policy board raised its assessment on overall conditions. BOJ members noted that stimulus exit policy was to be determined by the economy, while some saw ongoing risks of private consumption weakening further as well as persisting uncertainty of whether the output recovery can be sustained give the perilous state of global demand. On inflation, BOJ members straddled both sides of the fence - some worried about the risks of rising commodity prices while others cautioned against ongoing expectations of further declines. On the bright side, the minutes did suggest evidence of improvement in liquidity conditions - sentiment that was reiterated in the most recent statement earlier this week.

- In other notable macro news, a former PBOC advisor and a top-tier investment bank followed yesterday's vote of confidence on GDP prospects for China from the World Bank. Ex-PBoC adviser Yu said he had no doubt that China's economy can meet its 8% 2009 target, also expressing his concerns over the inflationary impact of the Fed's quantitative-easing policy ahead of next week's Fed decision. Over in the private sector, Barclays was also upbeat on China's prospects, raising 2009 GDP estimates to 7.8% from 7.2% and 2010 estimates to 9.6% from 9.0% in 2010. Elsewhere, GDP forecasts for New Zealand were downgraded by the NZ Treasury by as much as 2% on account of swine flu impacting the country's tourism and travel business. Over in Korea, Financial Regulatory chairman weighed in on the recent monetary policy debate, noting that focus should remain with securing a sustainable economic turnaround, while also discouraging allowing banks to repay recapitalization funds.

- In equity-specific developments, the gainers were generally led by financials and tech names across the region. Among the biggest movers in Tokyo, Elpida rose 4% on press rumors the company may apply for as much as Y40B in govt funds, and Chiyoda rallied over 5% after securing a contract worth about ¥100B for an oil well in Saudi Arabia. Shipper Kawasaki Kisen was also firmer after an upgrade to Equal-weight from Morgan Stanley. In Sydney, oil and gas names traded firmer on overall energy strength, with Woodside Petroleum and Santos rising 3% and 1.5% respectively. Rio Tinto - a big loser in the prior session - saw its shares remain under pressure to the tune of about 3% however, as regulatory uncertainty over approval of the BHP tie-up retained its bearish pull.

- In currencies, US majors were generally contained in narrow ranges after late US-session greenback bounce on a report that the British Bankers Association (BBA) fixing panel formulated plans to broaden the number of banks contributing to LIBOR fixing. EUR/USD was last seen firmer just above 1.3920, GBP/USD ranged between 1.6300 and 1.6380, and USD/CHF retreated from intraday highs just below 1.09 to 1.0830's. In commodity FX, AUD was last seen targeting intraday resistance around 0.8050, and USC/CAD returned below 1.13.

- Crude oil is gaining in Asia and tracking the advance in equities. In terms of Asian oil demand, Nippon Oil, Japan's largest oil refiner, said that it planned to lower oil production by 25% y/y in July, after cutting its June output by 4%. Nippon Oil cited lower domestic demand for its decision to curtail output. In OPEC news, the cartel's President said that oil prices are satisfactory for producers and consumers at the moment. The OPEC President added that oil prices at $70-$75/bbl are positive for the economy. Overall, oil prices are on track for the first weekly drop in 5 weeks. Spot Gold is tracking the gains in oil prices, but prices are consolidating between the $928-$929/oz area, which is seen as the 100-day moving average, and $944/oz, which corresponds with the neckline of a head and shoulders top. In central bank news Russia, which holds the world's 3rd largest foreign exchange reserves, noted that in the week ended June 12 its gold and forex reserves declined for the first time in 6-weeks to $406.6B from $409.5B. Overall gold prices are on pace to decline for the 3rd consecutive week as markets await further catalysts.

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