Asian stock markets wobble as China Evergrande woes sap confidence

HONG KONG, Sept 24 (Reuters) – Asian shares were on edge on Friday, hurt by persistent uncertainty around the fate of debt-ridden China Evergrande (3333.HK), even as increased risk appetite drove U.S. stocks and Treasury yields higher.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was little changed after falling 0.7% this week, poised for its third weekly loss in a row.

Australian (.AXJO) shares fell 0.4%, while the Hong Kong benchmark (.HSI) was mostly flat.

Japan’s Nikkei (.N225) rose 2%, however, catching up with global gains after the market was closed for a public holiday. Chinese blue chips (.CSI300) reversed early losses to gain 0.3% after a cash injection from the central bank brought its weekly injection to 270 billion yuan ($42 billion) – the largest since January.

U.S. stock futures, the S&P 500 e-minis , were up 0.5%, while European stock futures and British stock futures , slipped.

Investors continued to worry about the fate of property developer Evergrande which missed an interest payment deadline on Thursday and has entered a 30-day grace period.

Evergrande shares fell 11% on Friday, extending losses following a Reuters report that some offshore bondholders had not received interest payments by the Thursday deadline. It rallied 17.6% the previous day after the company said it had agreed to settle interest payments on a domestic bond. read more

Global investors have been on tenterhooks as debt payment obligations of Evergrande, labouring under a $305 billion mountain of debt, triggered fears its malaise could pose systemic risks to China’s financial system.

Ray Ferris, chief investment officer for South Asia at Credit Suisse, said that while investors were jittery about China’s prospects due to woes in the property sector and a slew of regulatory changes, there was positive sentiment elsewhere.

“Growth in the large developed economies is above trend, likely to remain above trend and monetary policy remains very supportive of asset prices likely all the way through the middle of next year,” he said.

“Every once in a while shocks to the system give us a correction, but these are more shallow than in the last several decades because of the weight of money out there that needs a home.”

The Dow Jones Industrial Average (.DJI), the S&P 500 (.SPX) and the Nasdaq Composite (.IXIC) all gained more than 1% overnight, as investors appeared to take the Federal Reserve’s latest tapering signals in stride.

The Fed said on Wednesday it could begin reducing its monthly bond purchases by as soon as November, and…