Asia shares set for weekly gains, Nikkei retreats as BOJ leans hawkish

• Nikkei retreats from record high, yen gains after BOJ
• Wall St futures flat after record closes
• Investors await Trump-Xi call

By Stella Qiu

SYDNEY, Sept 19 (Reuters) - Asian shares were headed for weekly gains on Friday on hopes of further rate cuts around the world, while the Nikkei retreated from record highs after the Bank of Japan flagged a further unwinding of its massive stimulus policies.

European stocks were headed for a flat open, with EUROSTOXX 50 futures STXEc1 little changed. Both S&P 500 futures ESc1 and Nasdaq futures NQc1 were flat after Wall Street closed at record highs overnight.

On Friday, the BOJ maintained short-term interest rates at 0.5%, as widely expected, but two members voted for a hike. It also decided to start selling its vast holdings of exchange-traded funds (ETF) and real-estate investment trusts (REIT).

Data showed Japan's core inflation ran at 2.7% in the year to August, marking the slowest pace in nine months, although it was still above the central bank's 2% target.

The surprise voting dissent and asset sales caught stock investors off guard. The Nikkei .N225, which hit a record high in early trade, reversed gains and was last down 0.3%, trimming its weekly gain to 0.9%.

The dollar lost 0.3% to 147.51 yen JPY=EBS. The 10-year Japanese Government Bond yield JP10YTN=JBTC jumped 4 basis points (bps) to 1.635%, just short of this month's high of 1.64%, a level not previously seen since July 2008.

"While the majority still favour a steady path, the presence of two board members voting against today's decision suggests the debate is tilting toward quicker normalisation," said Charu Chanana, chief investment strategist at Saxo.

"That's a structural headwind for broad indices like TOPIX/Nikkei, though the impact depends on the pace and signalling of sales."

The focus now falls on BOJ Governor Kazuo Ueda's news conference, scheduled for 0630 GMT.

Earlier in the week, central banks in the United States , Canada and Norway cut interest rates, fanning hopes of more policy easing to come and brightening the outlook for global economy, while the Bank of England held steady.

South Korea's benchmark share index .KS11 lost 0.7% but still hovered near a record level. It was up 1.3% for the week, bringing the total gain over the past two weeks to over 7%.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was off 0.2% but still looked set for a weekly rise of 0.6%, hovering not far from its four-year tops.

Friday is also the day when stock options, index options and stock index futures all expire on the same day, leading to increased trading activity and potential market volatility.

Chinese blue chips .CSI300 inched up 0.6%, while Hong Kong's Hang Seng .HSI slipped 0.1% ahead of an expected phone call later in the day between President Donald Trump and his Chinese counterpart Xi Jinping.

There is a lot for investors to consider leading into that call, with a deal on TikTok possibly close, China's Huawei outlining its chip plans, and Beijing ordering tech firms not to buy Nvidia's AI chips.

Overnight, benchmark S&P 500, the Dow and the Nasdaq all closed at record highs, helped by better jobless claims data and news that Nvidia NVDA.O will invest $5 billion in the struggling U.S. chipmaker Intel INTC.O.

Intel shares surged 23%, while Nvidia gained 3.5%.

In foreign exchange markets, the dollar rebounded after the Fed's first rate cut in nine months. The dollar index =USD held at 97.38, finding some support after plunging to a multi-year low of 96.224 on Wednesday.

The pound GBP=D3 held losses at $1.3546, having slid 0.6% overnight as the BOE kept rates unchanged at 4%.

In the bond market, 10-year Treasury yields US10YT=RR rose 2 basis points to 4.1216%, up for the third straight session.

In commodity markets, oil prices eased on worries about fuel demand in the United States. U.S. crude CLc1 slipped 0.3% to $63.38 a barrel, while Brent LCOc1 was off 0.2% at $67.32.