In This Article:
* Ex-Japan Asia MSCI up 1.3 pct; Nikkei, Shanghai down
* Volatility index hits highest since Feb
* China, U.S. shares among worst performers this week
By Hideyuki Sano
SINGAPORE, Oct 12 (Reuters) - Asian shares found a slightly firmer footing on Friday to set course for their first gains in two weeks, but the rout continued in Shanghai where shares hit lows last seen in 2014.
Investor sentiment was frail though as Wall Street's fear gauge rose to an eight-month high, pointing to more downside risk, market sources said.
The biggest market shakeout since February has been blamed on a series of factors, including worries about the impact of a Sino-U.S. trade war, a spike in U.S. bond yields this week and caution ahead of earnings seasons.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 percent, led by gains in South Korea and Taiwan.
The MSCI index fell 3.6 percent on Thursday to hit a 1-and-a-1/2 year low. It is on track for a weekly loss of more than 4 percent.
Japan's Nikkei average fell 0.5 percent while the Shanghai Composite dropped as much as 1.8 percent to the lowest levels since late 2014, taking losses so far this week to almost 10 percent.
Wall Street offered Asia a weak lead overnight with the U.S. S&P 500 falling just over 2 percent to a three-month low, following a 3.29 percent drop on Wednesday.
"The (U.S. share) market is now about 7 percent off of its 100-day high, but this is far from a rare occurrence historically," economists at RBC Capital Markets wrote in a research note.
"Indeed, history is littered with over 5 percent-ish type selloffs in the midst of economic expansions," they said.
The futures of the U.S. index rebounded 0.6 percent in Asian trade on Friday, in part helped by media report that the U.S. Treasury Department will not call China a currency manipulator in its upcoming semiannual report.
However, Chinese trade figures on Friday showed China's trade surplus with the United States hit a record high in September, providing a likely source of contention with U.S. President Donald Trump over trade policies and the currency.
The data showed solid expansion in China's overall imports and exports, suggesting little damage from the tit-for-tat tariffs with the United States.
CBOE Volatility index rose on Thursday to its highest close since Feb 12, pointing to investors concern of further losses in markets.
"There still appears to be downside risk to the market amid worries the Sino-U.S. trade war may be slowing down global growth," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.