SE Asia stocks wary before Fed chair Yellen's speech

Most Southeast Asian stock markets trod cautiously on Friday as investors waited for signals on the future trajectory of US interest rates from Federal Reserve chair Janet Yellen in her speech later in the day.

Recent strong readings on the US labour market, and signs that inflation was finally beginning to pick up, are encouraging some policymakers to believe that rates should be raised, if not as soon as September's policy meeting then at least before the end of the year.

Traders currently put chances of a December rate hike at about 42%.

Several policymakers have said raising interest rates gradually would allow them to stimulate the economy for longer, but that an overheating economy could end in a recession.

Singapore shares fell 0.7%, snapping three sessions of gains, with telecoms such as StarHub Ltd dragging the index down. For the week, they posted a gain of 0.5%.

Singapore's industrial production in July shrank from a year earlier, with manufacturing output falling 3.6%, data from the Singapore Economic Development Board showed. The median forecast in a Reuters survey was a rise of 0.9%.

Philippine shares closed marginally lower, posting their fourth straight session of losses, led by telecoms including Globe Telecom Inc. They declined 1.1% this week, their third straight weekly loss.

Investors took a cautious stance ahead of Yellen's speech, looking for indications of a rate hike, SB Equities said in a note, adding that "trading participants have increased chatter

on a potential surprise in tonight's speech."

Vietnam shares ended 1.4% higher with index heavyweight Vietcombank gaining 6.5% after the company said it would pay a 10 cash dividend and 35% share dividend to shareholders.

They added 0.8% for the week, their third straight weekly gain.