The Japanese yen that underperformed in early Asian trading on Friday on the back of a rally in Asia-pacific stocks erased some of its losses in late trading after a report showed that the pace of Chinese economic growth in the first quarter slowed to its lowest level in nearly 3-years.

China's gross domestic product expanded 8.1 percent year-on-year in the first three months of 2012, slower than the fourth quarter's 8.9 percent increase. Economists were looking for a growth slowdown to 8.4 percent.

Separately, the statistical office reported that the industrial production grew 11.9 percent year-on-year in March, compared with expectations for a 11.5 percent expansion.

Retail sales increased 15.2 percent annually in March while expectations were for a 14.8 percent rise.

The members of the Bank of Japan's monetary policy board felt that the expansions in their asset purchase program had a positive effect on the financial markets, minutes from the bank's meeting on March 12 and 13 revealed today.

The minutes also noted that some members believe CPI to be heading for a mild upward trend and away from deflation.

At the meeting, the BoJ decided to expand its loan scheme aimed at supporting economic growth by JPY 2 trillion. At the same time, the central bank kept its monetary policy unchanged. The measure was largely aimed at tackling deflation and establishing a new basis for economic growth.

Asian markets are mostly trading notably higher with investors indulging in some hectic buying, tracking a positive lead from Wall Street, where stocks posted strong gains overnight on encouraging trade data. Hopes of continuation of U.S. earnings momentum too contributed to the positive start.

However, some of the markets in the region are trading off their highs following a slower than expected GDP growth in China. Thus far, Japan's Nikkei average was up 1.25 percent, Australia's S&P/ASX rose 0.76 percent, Taiwan's TWII climbed 1.54 percent, South Korea's KOSPI jumped 0.65 percent and China's Shangai composite index rose to 0.18 percent.

Overnight economic data from the U.S. was mixed, with the trade deficit narrowing to $46.0 billion in February from $52.5 billion in January, initial jobless claims rising to 380,000 in the week ended April 7 from the previous week's revised figure of 367,000 and the producer price index being unchanged in March following a 0.4 percent increase in February.

The yen that fell to a 1-week low of 84.84 against the Australian dollar and 67.52 against the New Zealand dollar snapped back to 84.18 and 67.09, respectively as risk-off sentiment generated following the disappointing China data.

The yen reached 3-day lows against the rest of majors in early Asian trading but the bear run was checked by investors concern that the red dragon economy is struggling to escape from slowdown.

The yen is presently trading near 81.0 against the dollar and 129.10 against the pound, up from previous lows of 81.21 and 129.61, respectively.

The Japanese currency also rebounded to 81.28 against the Canadian dollar from pre-China GDP high of 81.69. The yen inched higher to 106.64 against the euro and 88.77 versus the Swiss franc from previously hit 3-day lows of 107.12 and 89.16, respectively.

Looking ahead, German and Italian consumer price indexes and the U.K. producer price inflation data- all for March are expected in the upcoming European session.

The U.S. inflation report for March and the University of Michigan's consumer confidence survey results for April are expected to garner market attention in the New York session.

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