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Asian shares slipped on Friday while the yen was aiming for its best week in four months as strong local inflation data had traders favouring an imminent rate hike from the Bank of Japan.

Overnight, trading in U.S. equities and Treasuries was closed due to the Thanksgiving holiday, leaving little lead for Asia. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3% and was down 0.5% for the week.

Japan's Nikkei dropped 0.7% as the yen surged after Tokyo's inflation data.

Data showed core consumer prices in Japan's capital accelerated in November and stayed above the central bank's 2% target in a sign of broadening price pressure. The dollar fell 0.9% to 150.17 yen, bringing its weekly loss to 3%, the biggest since late July.

Traders now see a 60% chance that the BOJ could hike interest rates again in December, having been undecided before the data. A strengthening economy and concerns over the depreciating yen have recently added to the urgency for the BOJ to act.

"We note that the acceleration in inflation, combined with the solid recovery in monthly activity, increases the odds of another BoJ rate hike in December," said analysts at ING in a note.

"With the U.S. closed for Thanksgiving yesterday, and many market participants likely extending the holiday to the weekend, there isn't too much action in financial markets to talk about."

Wall Street futures rose 0.1% in Asia, while Treasury yields eased as the cash market reopened in Japan. Ten-year yields fell 2 basis points (bps) to 4.240%, the lowest in a month, and were down 17 bps for the week, the biggest since early September.

The dollar is down 1.4% against its major peers this week as markets rekindled hopes for a U.S. rate cut in December. Futures narrowed the odds of a quarter-point rate cut from the Federal Reserve in December to 63%, from 55% a week ago, according to CME Group's Fed Watch Tool.

Most of the action overnight was in Europe, where French bond yields edged lower, a welcome bit of respite for France's government, which saw its borrowing costs rise to their highest over Germany's since 2012 on Wednesday.

French Prime Minister Michel Barnier on Thursday dropped plans to raise electricity taxes in his 2025 budget, bowing to far-right threats to bring the government down unless he eased the burden on the working classes.

German inflation missed forecasts in November, suggesting some downside risk for the eurozone inflation reading due later in the day.

Traders are still leaning towards a 25-bps rate cut from the European Central Bank in December, after a board member Isabel Schnabel said it should only cut rates gradually.

Oil prices were up slightly but looked set for weekly losses on the Israel-Hezbollah ceasefire deal in Lebanon. U.S. West Texas Intermediate crude futures rose 0.1% to $68.76 a barrel, but were down 2.5% for the week.

Gold is down 2.7% for the week at $2,638.29 per ounce