Asian markets edged lower on Friday as concerns over economic growth and virus outbreaks weighed on sentiment and risk aversion set in following dovish comments from the Federal Reserve chief.

Fed Chair Jay Powell reiterated the central bank's plan to maintain stimulus initiatives until the economy fully recovers while Treasury Secretary Janet Yellen warned that inflation would remain elevated for months to come.

"I think we will have several more months of rapid inflation, so I'm not saying that this is a one-month phenomenon," Yellen said during an interview on CNBC after US markets closed.

However she predicted price increases would reach "normal levels" over the medium term.

Wall Street ended mixed, with the Dow closing marginally higher while the other two major indexes retreated.

"US stocks tumbled after a second day of Fed Chair Powell's dovish testimony didn't provide any fresh catalysts to buy risky assets," said OANDA's Edward Moya.

"Risk aversion is firmly in place, possibly because the earnings bar may have been set too high for the banks and because the reopening trade can't get its groove back. It didn't help having China's economic growth reading overnight come in below expectations," Moya added.

Asian markets were mostly lower, with Tokyo closing down one percent with investors cautious over expanding Covid-19 infections and as the Bank of Japan trimmed its GDP growth forecast for the current fiscal year.

"Investors are worried about a spike in infection cases in Tokyo ahead of the Olympics," Shinichi Yamamoto, a broker at Okasan Securities, told AFP.

- Biden warning on Hong Kong -

Hong Kong ended flat as late profit-taking wiped out earlier gains ahead of an advisory from US President Joe Biden expected later Friday warning firms over doing business in the city as Beijing tightens its grip.

"The situation in Hong Kong is deteriorating. And the Chinese government is not keeping its commitment that it made how it would deal with Hong Kong," Biden said Thursday at a press conference with visiting German Chancellor Angela Merkel, signalling no imminent improvement in Sino-US relations.

Shanghai closed 0.7 percent lower while Seoul, Taipei, Kuala Lumpur and Bangkok also retreated. Wellington was flat while Sydney, Singapore, and Jakarta ticked higher.

European stocks opened higher, with London up 0.5 percent as markets shrugged off Asian losses and virus concerns.

Investors were also awaiting US retail sales for June due later in the day for the latest indication on the state of the economic recovery.

"While the US is doing well on the vaccine rollout plans and the reopening of the economy, with theme and holiday parks also reopening, the rise in cases that we are now seeing appears to be feeding into an overriding feeling of caution around consumer spending patterns which appears to be tempering retail sales," said Michael Hewson, chief market analyst at CMC Markets UK.

Both main oil contracts were trading marginally higher in Asian trade, with WTI down 3.9 percent over the week while Brent was 2.7 percent lower.

European, US stocks fall on Chinese data, Fed comments
London (AFP) July 15, 2021 - Stock markets were weaker Thursday as traders mulled mixed economic data and the odds that inflation and Covid could be with us for a while.

European indices were around 1.0 percent lower as trading ended, while the Dow Jones index was essentially unchanged in midday exchanges.

In Tokyo, the Nikkei index had given up 1.2 percent earlier in the day, with investors still concerned about the virus situation in Japan.

Back in Europe, the sterling gained against the euro after data showed Britain's unemployment rate falling as the economy gathers steam.

UK job vacancies are soaring as reopened businesses -- particularly in the hospitality sector -- struggle to recruit sufficient staff.

But fears that inflation could last longer than expected dampened sentiment, analysts said.

The FTSE index fell after Michael Saunders, a member of the Bank of England monetary policy committee, "flagged a raft of warning signs indicating that the trends fuelling prices rises may not be temporary", noted Susannah Streeter of Hargreaves Lansdown.

ThinkMarkets analyst Fawad Razaqzada noted that Saunders had also said it might "become appropriate fairly soon to withdraw some stimulus" -- one of the main sources of fuel for the stock market's rise.

Meanwhile, Beijing released a raft of data Thursday that indicated solid but slowing growth.

"China's second-quarter GDP figures were slightly better than expected, but there is still a sense of unease about the country's economic outlook," said Danni Hewson, financial analyst at AJ Bell.

"A similar feeling is spreading to other countries and suggesting that the post-Covid rebound may find it harder to keep going at a strong pace."

China's economic growth slowed to 7.9 percent in the second quarter, down from 18.3 percent in the previous three months when activity roared back to life after last year's pandemic-enforced shutdown.

The Chinese data were released a day after Federal Reserve chief Jerome Powell said the US central bank would maintain its stimulus until the recovery was well under way.

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China growth slows to 7.9% in second quarter in Covid recovery
Beijing (AFP) July 15, 2021
China's sharp economic rebound from last year's pandemic slowdown lost steam in the second quarter, official data showed Thursday, with consumers lacking the confidence to splurge. The world's second-largest economy has staged a rapid recovery from last year's slump caused by the coronavirus pandemic, but its pace is easing with manufacturing slowing and consumer demand not picking up as quickly as expected. China's GDP growth came in at 7.9 percent on-year in the April to June period, said the ... read more