Asian shares mixed on US rally, China economic growth woes

TOKYO (AP) — Asian shares were mixed Friday, as Chinese shares sank after leaders acknowledged the official 5.5% growth target for this year won't be met.

Investors appear to have grown more convinced that the Federal Reserve may temper its aggressive interest rate hikes aimed at taming inflation after the Commerce Department reported the U.S. economy contracted at a 0.9% annual pace in the last quarter. That followed a 1.6% year-on-year drop in the first quarter.

Investors were also cautiously eyeing regional tensions over China’s stance on Taiwan after President Joe Biden and China’s Xi Jinping spoke for more than two hours on Thursday. China left no doubt it blames the U.S. for a deteriorating relationship, but the White House said call's aim was to “responsibly manage our differences and work together where our interests align.”

Hong Kong's Hang Seng index dropped 2.4% to 20,123.55 and the Shanghai Composite index declined 1% to 3,250.64 after China’s leaders acknowledged the struggling economy won’t hit its official 5.5% growth target this year.

The announcement after a planning meeting of the ruling Communist Party said Thursday that Beijing will try to prop up sagging consumer demand but will stick to strict anti-COVID-19 tactics that have disrupted manufacturing and trade. It underscores the high cost Xi's government is willing to incur to stop the virus in a politically sensitive year when he is widely expected to try to extend his term in power.

Japan's benchmark Nikkei 225 lost 0.2% to 27,801.64, while Australia's S&P/ASX 200 gained 1.0% to 6,945.20. South Korea's Kospi added 0.7% to 2,451.50.

Japanese government data showed factory output in June jumped 8.9% from the previous month, marking the first rise in three months. The recent easing of pandemic...