Asian shares were broadly lower Thursday, with Japan the regional outperformer as the yen softened against the dollar following the release of minutes from a hawkish-sounding U.S. Federal Reserve meeting.

The Nikkei Stock Average was up 0.1% in early morning trade, recovering slightly from losses in the previous session. Australia's S&P/ASX 200 was down 0.8%, Korea's Kospi fell 0.5% and Hong Kong's Hang Seng Index was also off 0.7%.

Overnight, the minutes of the Federal Open Market Committee's September meeting revealed that three members voted for an immediate interest rate rise. However, the majority of members felt that "the case for an increase in the federal-funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives."

Still, the minutes offered little in the way of surprises and the market continued to believe that the Fed was on track to act in December. According to CME Group's FedWatch tool, the probability of a rate rise at the central bank's final meeting of the year rose to 69.9% from 69.5% a day earlier.

"The minutes are the underlying driver for the region today that has seen dollar strength, which is a further boost for tightening sentiment by the Fed," said Gavin Parry, managing director at Parry International Trading.

Exporters in Japan gained as the weaker yen made their goods cheaper to ship overseas. The currency was last down 0.2% against the greenback. Among key auto makers, Nissan Motor jumped 2.2%, Honda Motor rose 1.7% and Mazda Motor was up 1.5%.

In addition to favorable currency flows, shares of Japanese auto maker Suzuki Motor surged 3.2% and Toyota Motor gained 1.2%, after the two companies said they were in talks to develop a business partnership to share the burden of developing self-driving cars and low-cost vehicles. The two companies said it was a step that was needed to survive "unprecedented" change in the industry.

Japan's financial sector also staged a rebound after declining sharply Wednesday following comments from the Bank of Japan's governor that suggested the bank would deepen negative rates if needed.

In Australia, producers were hit by falling commodity prices, which chipped away at their bottom line and dragged down the wider benchmark. Shares of Rio Tinto and BHP Billiton, two of the world's biggest copper producers, were both off 2.4%. The London Metal Exchange's three-month copper contract was recently down 0.1%. Brent, the global crude oil benchmark, was down 0.6% at $51.48 a barrel in Asian trade.

In Hong Kong, shares of Cathay Pacific Airways tumbled 5.2% after the premium carrier said it was seeing difficult operating conditions in the second half. HSBC downgraded its rating on the blue-chip stock to reduce from hold, telling clients that Cathay Pacific should expect an unprofitable 2017.

"Yield erosion [at the airline] continued as expected but the decline is worse than we anticipated," HSBC said in a note.

Elsewhere, the Bank of Korea on Thursday kept its base rate unchanged for a fourth straight month. The decision to hold the rate steady at a record-low 1.25% also comes with the central bank under renewed pressure from parliament to refrain from easing policy further.

Looking ahead, the market will be watching for initial jobless claims data from the U.S. due later in the global trading day, analysts say.

Kosaku Narioka and Kwanwoo Jun contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

 

(END) Dow Jones Newswires

October 12, 2016 23:05 ET (03:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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