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A woman using a smartphone is reflected on a stock quotation board outside a brokerage in Tokyo, Sept. 29, 2015. Issei Kato/Reuters

By Hideyuki Sano

TOKYO (Reuters) -- Asian shares looked set to hold on to this week's gains, while the dollar took a breather on Friday after stepping back from seven-month highs as investors grappled with the prospects of higher U.S. borrowing costs and slower global economic growth.

Commodity prices were pressured, with copper near 6-1/2-year lows and a major sea freight index hitting its lowest level on record, underscoring worries over slackening world demand.

MSCI's broadest index of Asia-Pacific shares outside Japan was almost flat on the day, though it held on to gains of 1.7 percent so far this week.

Japan's Nikkei retreated from three-month highs hit on Thursday, falling 0.5 percent as the dollar dipped versus the yen though it is likely to post ts fifth consecutive week of gains.

"Share prices are boosted by ample liquidity. Chinese authorities are desperate to support share prices while the European Central Bank has also clearly indicated an easing in December," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

"People who sold shares in the summer on concerns about slowdown in China are buying back. But they are turning a blind eye to the poor state of economic fundamentals," he said.

A case in point is copper CMCU3, which seen as a good gauge of the global economy because of its wide industrial use. It slumped to a 6-1/2-year low of $4,573.50 per tonne on Thursday before bouncing to $4,630.50, and is down 4.0 percent so far this week.

It would mark the biggest weekly fall since late September if sustained by Friday's close, driven by persistent worries that supply cuts won't be enough to offset the pressure on prices caused by weak demand in top user China.

In another sign of weak global demand, the Baltic Index, which tracks rates for ships carrying dry bulk commodities, fell to a record low, having fallen 58.8 percent from its peak this year.

"Many economies in Asia and emerging markets are still not doing that good. Demand for raw materials remain very weak," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

Oil prices were also not far from near three-month lows hit earlier this week.

Global benchmark Brent futures last stood at $44.26 per barrel, compared to Monday's low of 43.15.

U.S. crude futures traded at $40.54, having fallen to near three-month lows of $39.89 on Thursday.

The dollar weakened across the board on Thursday after rising for four straight sessions, as investors cashed in recent gains driven by widespread expectations of a U.S. Federal Reserve interest rate increase next month.

The dollar index stepped back from Wednesday's seven-month high of 99.853 to stand at 99.05.

The euro bounced back to $1.0724 after having hit a seven-month low of from $1.0617 on Wednesday.

Long-dated U.S. debt yields also dipped, with the 30-year yield hitting a two-week low of 2.988 percent on Thursday. It last stood at 3.011 percent.

At the shorter end, money market futures continue to price in around a 70 percent chance of a rate hike by the Fed in December.

Markets showed limited reaction to comments from Fed Vice Chairman Stanley Fischer that the Federal Reserve has telegraphed its imminent interest rate hike so well to avoid rate liftoff surprise.

(Editing by Shri Navaratnam)