HONG KONG, Aug 21 — Asian stocks fluctuated as investors monitored war drills scheduled for the Korean peninsula and prepared for a key meeting of global central bankers.

Japan’s Topix index and South Korea’s Kospi index were modestly lower, while Australia’s declined 0.6 per cent.

US stocks rallied on Friday from session lows — though they still ended the day lower — after the White House announced that Steve Bannon would be leaving his job as chief strategist.

Investors remain on edge after a terror attack in Barcelona and amid simmering tensions on the Korean peninsula. Oil held onto gains and the yen fell.

The removal of Bannon, the former chairman of Breitbart News, may quell some of the fallout from Trump’s remarks on violence in Charlottesville, Virginia, which continue to raise questions about his ability to focus on plans to boost the economy.

Investors pulled US$1.3 billion (RM5.58 billion) from equity funds in the week ending Aug. 16 as tensions over the Korean peninsula escalated, according to EPFR Global data. Outflows from US stock funds were triple that, suggesting doubts about Trump’s stimulus plans are an additional worry.

Heightened terror fears added to the malaise after at least 13 people died when a van plowed into pedestrians in Barcelona Thursday.

Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are among central bankers gathering at Jackson Hole, Wyoming, later this week for their annual meeting. The theme this year is "Foster a Dynamic Global Economy,” at a time when persistently weak inflation in the US and elsewhere has clouded prospects for sustainable, stronger growth worldwide.

Terminal subscribers can read more on our Markets Live blog.

Among the key events this week:

Before heading to Jackson Hole, ECB’s Draghi will give a speech on Germany on Wednesday. Minutes from the Governing Council’s July meeting released last week showed that officials are still uncertain how to signal changes in their policy settings. 

Economic releases this week include Thailand second-quarter GDP, sales of new US homes in July, Taiwan July industrial production, Malaysia July CPI, UK second-quarter GDP, New Zealand July trade data and Japan July CPI. Indonesia is among central banks to hold monetary-policy meetings. US-South Korea military drills are scheduled to begin. Philippines markets are closed for a holiday today.

Here are the main moves in markets:

Stocks

Japan’s Topix index was down less than 0.1 per cent, as was South Korea’s Kospi index. Australia’s S&P/ASX 200 Index dropped, with BlueScope Steel Ltd. tumbling 18 per cent after the company reported disappointing earnings. Futures on the S&P 500 were slightly lower as of 9:28 a.m. in Tokyo. The underlying gauge ended down 0.2 per cent Friday. The MSCI Asia Pacific Index slid 0.2 per cent today.

Currencies

The yen fell 0.1 per cent to 109.24 per dollar. The Bloomberg Dollar Spot Index was up 0.1 per cent, bouncing from a 0.3 per cent drop on Friday. The euro was trading at US$1.1754 after advancing 0.4 per cent. The Australian dollar was down 0.1 per cent at 79.25 US cents after gaining 0.6 per cent on Friday.

Bonds

The yield on 10-year Treasuries gained less than one basis point to 2.20 per cent. The Australian yield on notes of similar maturity rose one basis point to 2.63 per cent.

Commodities

West Texas Intermediate crude was little changed at US$48.54 a barrel, holding a 3 per cent rally on Friday. Gold was little changed at US$1,284.81 an ounce. — Bloomberg