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Asia stocks down, dollar posts gains on positive U.S. data

Asian shares fell on Friday as investors balanced positions on the last day of the quarter. The dollar rose on positive U.S. economic growth data and the euro was flat after overnight losses on figures suggesting slowing expansion in Europe. European shares were headed for a muted start, with financial spreadbetters expecting Britain's FTSE 100 . FTSE to open 0.3 percent lower, France's CAC 40 . FCHI to start the day down 0.1 percent and Germany's DAX . GDAXI to be little changed. MSCI's broadest index of Asia-Pacific shares outside Japan . MIAPJ0000PUS retreated 0.55 percent. The benchmark is up 12.5 percent for the quarter. Hong Kong . HSI shares fell 0.6 percent, but were still headed for a 9.8 percent quarterly jump. "Asia saw some pretty healthy profit-taking after a few sessions of solid gains, and as investors await Eurozone and U.S. inflation data tonight," said James Woods, global investment analyst at Rivkin Securities in Sydney. China's CSI 300 index . CSI300 bucked to trend to add 0.4 percent, putting it on track for a 4.2 percent quarterly rise. Activity in China's manufacturing sector expanded at the fastest pace in nearly 5 years in March, beating expectations, an official survey showed on Friday. The data came as U.S. President Donald Trump foreshadowed a tense meeting with Chinese President Xi Jinping next week by tweeting on Thursday that the U.S. could no longer tolerate massive trade deficits and job losses. Trump will also sign executive orders on Friday aimed at identifying abuses that are causing the deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said.

Chinese Vice Foreign Minister Zheng Zeguang said on Friday that China does not have a policy to devalue its currency to promote exports, and neither does it seek a trade surplus with the United States. U.S. stock futures ESc1 were down between 0.2 and 0.3 percent in Asian trade. Japan's Nikkei . N225 reversed gains to close down 0.8 percent as markets digested data that showed Japanese core consumer prices rose 0.2 percent in February. While that is the fastest annual pace in nearly two years, household spending and consumer inflation remained subdued when the effect of rising energy costs was stripped out. The Japanese benchmark was down 1.1 percent for the first quarter. The South African rand dropped to a two-month low after President Jacob Zuma sacked and replaced both the finance and deputy finance ministers in a cabinet reshuffle after days of speculation that has rocked the country's markets and currency.

The weakened rand saw the dollar up 1.7 percent at 13.5098 rand ZAR=, on track to end the week almost 9 percent higher. Overnight, all three major Wall Street indexes closed about 0.3 percent higher after fourth-quarter annualized growth in U.S. gross domestic product was revised up from the previously reported figure. The upbeat data also helped lift the dollar. The dollar index . DXY, which tracks the greenback against a basket of six peers, rose 0.1 percent to 100.54, after hitting a two-week high on Thursday. Despite this week's gains - it is up almost 1.7 percent since Monday's four-month low - the greenback is set to end the quarter 1.6 percent lower. The dollar was steady at 111.885 yen JPY= after Thursday's 0.9 percent jump, but is heading for a 4.2 percent quarterly decline.

Markets are looking to U.S. personal consumption data for February later on Friday, a measure of potential inflation watched by the Federal Reserve. Nervousness could return to U.S. markets on news Trump's former national security adviser, Michael Flynn, has offered to testify before congressional committees probing possible ties between the Trump campaign and Russia, his lawyer said on Thursday."Looking forward, this is important," said Angus Gluskie, managing director at White Funds Management in Sydney. "As markets have shown over recent weeks, if Trump's position is undermined by security issues or a reticent right wing Congress, investors are likely to respond negatively."The euro EUR=EBS was flat at $1.0676 after Thursday's 0.8 percent tumble. The common currency is on track to post a gain of 0.9 percent for March and 1.45 percent for the quarter. Data showed German and Spanish consumer inflation slowed more than expected in March, disappointing investors who were hoping for a wind-down of the European Central Bank's monetary stimulus. In commodities, U.S. crude slipped 0.5 percent to $50.09 a barrel. On Thursday, it closed 1.7 percent higher after zipping to a three-week-high earlier in the session after Kuwait backed an extension of OPEC production cuts. It is heading for a 6.7 percent loss for the quarter. Global benchmark Brent LCOc1 slid 0.7 percent to $52.64 a barrel and is on track for a 7.4 percent decline for the quarter. Gold XAU= pulled back 0.1 percent to $1,241.81 an ounce, extending Thursday's 0.7 percent loss on the dollar's strength, but remains set for a 7.85 percent quarterly gain.

Trump tax plan faces rockier road after bruising healthcare loss

The White House will take a lead role in crafting legislation to overhaul the U.S. tax code, eyeing an August target date as President Donald Trump seeks his first legislative victory following the failure last week of a long-promised bill to undo Obamacare. Trump's pledge to cut taxes, including a lowering of the rates paid by corporations, was a pillar of his 2016 presidential campaign and provided much of the fuel for the heady stock market rally that followed his Nov. 8 victory. The White House said on Monday it was moving ahead with tax reform, calling it a "huge priority" for the Republican president and "something that he feels very strongly about.""Obviously, we're driving the train on this," White House spokesman Sean Spicer said during a briefing, adding, "We're going to work with Congress on this."Spicer noted that Treasury Secretary Steven Mnuchin has talked about August as a target date for tax legislation, but said the timetable could slip depending on how quickly a consensus could be reached. Getting a broad tax bill passed by Congress and on Trump's desk to be signed into law will not be easy, especially after intra-party differences torpedoed the healthcare legislation, after the Trump administration fiercely lobbied for it. Republicans for seven years had promised to dismantle Democratic former President Barack Obama's Affordable Care Act, dubbed Obamacare, and the Trump administration made it its top priority when Trump took office in January. But the effort collapsed on Friday when members of the Freedom Caucus, the most conservative lawmakers of the House of Representatives, refused to support the bill, which was also backed by House Speaker Paul Ryan. The stinging defeat alarmed investors who began reassessing the chances for passage of the tax agenda this year. Major U.S. stock indexes opened sharply lower on Monday before paring losses, with the Dow Jones and the S&P 500 ending only moderately down.

House Ways and Means Committee Chairman Kevin Brady, the top House Republican tasked with tax reform, said over the weekend that the White House should start with proposals already in the House instead of crafting a separate bill."My point is that the Trump tax plan and the House Republican plan started at 80 percent the same. It think it’s grown to 90 percent or better," Brady told reporters on Monday."I think it’s critical for the White House and Republicans in Congress to agree on pro-growth tax reform together and move forward together as well," he added. DEMOCRATS MIGHT BE OPEN TO TALKS Analysts at Bank of America Merrill Lynch predicted in a research note that a tax bill, "if passed at all, could be a very watered-down version of current proposals."

The White House over the weekend dangled the idea of a compromise tax restructuring that could win support from moderate Democrats. White House chief of staff Reince Priebus on Sunday said such a package could include middle-class tax cuts. Spicer on Monday remained vague on how much Trump would allow the federal deficit to grow as a result of the tax cuts."It's a really early question to be asking at this point," Spicer said. The U.S. tax code has not undergone a major overhaul since 1986, during the administration of Republican President Ronald Reagan.

Democratic Senator Christopher Coons signaled his party would be open to discussing tax legislation if it was not merely a giveaway to the rich. Democrats had fought former President George W. Bush's tax policies for that reason. "If we have a move toward tax reform that could strengthen manufacturing, strengthen our exports and provide tax relief to the middle-class - not overwhelmingly to the wealthiest - there's a menu for us to start talking about it," the Delaware senator told MSNBC's "Morning Joe" program. Although winning over Democrats may be tough, the alternative - getting Republicans to vote as a bloc - could be a hard road in light of the healthcare rebellion by Republican lawmakers."Trump is stuck. He can't cajole the arch conservatives in the Republican Party, and at the same time, my sense is the Democrats don't want to throw him a bone either, so it is going to be difficult," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. One Republican lawmaker, Representative Tom Cole of Oklahoma, suggested Congress focus first on such things as getting a "realistic budget" done and passing legislation to raise the national debt ceiling."And then start on tax reform," Cole told MSNBC's "Morning Joe" program. "But start with real hearings and start in a way that everybody at least at the outset is a potential player." Representative Ted Poe of Texas, who resigned from the Freedom Caucus after the healthcare debacle, said that getting an infrastructure spending package - another key piece of Trump's legislative agenda intended to spur economic growth - through Congress will be no "slam dunk.""It's going to be very, very difficult," Poe told CNN's "New Day" program.