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Asian Shares Mixed, Yen Holds Gains After Germany, Turkey Incidents

MSCI's broadest index of Asia-Pacific shares outside Japan pared earlier gains.
MSCI's broadest index of Asia-Pacific shares outside Japan pared earlier gains.

Singapore: The safe-haven Japanese yen held on to gains on Tuesday, with investors spooked after deadly incidents in Germany and Turkey, while regional stocks were mixed following upbeat comments from Federal Reserve Chair Janet Yellen.

The Bank of Japan kept monetary policy steady as widely expected, maintaining its pledge to guide short-term rates at minus 0.1 per cent and the 10-year government bond yield around zero per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan pared earlier gains to trade little changed. Japan's Nikkei was flat.

Reduced volumes ahead of the Christmas holidays tempered buying in some Asian markets.

China's CSI 300 index slid 0.4 per cent, and Taiwan shares retreated 0.3 per cent. Hong Kong shares reversed earlier losses to trade little changed.

Wall Street ended higher on Monday, albeit below the session's highs, as optimism over Ms Yellen's upbeat comments about the US labour market offset some of the risk aversion following the attacks.

"Yellen painted a very positive picture in her commentary overnight," said James Woods, global investment strategist at Rivkin Securities in Sydney.

"The (Federal Open Market Committee) has done a fantastic job preparing the market for this second and subsequent hikes. Importantly they have continued to stress that the FOMC remains data dependent, only hiking when the underlying fundamentals of the economy support this."

Still, markets were rattled after a truck ploughed into a crowded Christmas market in central Berlin Monday evening, killing 12 people and injuring 48 others in what Germany's interior minister said looked like an attack.

The euro, which slid 0.5 per cent to $1.0401 on Monday, recovered 0.1 per cent to $1.04125 on Tuesday.

The euro was also pressured after the Russian ambassador to Turkey, Andrei Karlov, was shot and killed at an art gallery in the Turkish capital of Ankara.

The Turkish lira was steady at 3.532 per dollar on Tuesday after falling 0.7 per cent on Monday. The rouble was also little changed on Tuesday at 61.8115 per dollar. It slumped to as low as 62.0907 per dollar on Monday but recovered to end the day up 0.3 per cent at 61.8475.

The flight to safety following both incidents boosted the Japanese yen, although it pared some of the gains as the dollar strengthened after Ms Yellen's comments.

The US dollar, which fell as much as 1.2 per cent on Monday against the yen, ended the session down 0.7 per cent at 117.205 yen. It was steady at 117.21 yen on Tuesday.

The US dollar has risen 11.4 per cent versus the yen since Donald Trump's surprise election victory. Trump formally won the presidency after the Electoral College gave him more than the 270 votes required to be elected.

The dollar index, which tracks the greenback against a basket of six global peers, climbed 0.2 percent on Monday after Ms Yellen's upbeat labour market assessment. It was 0.1 per cent lower at 103.05 on Tuesday.

Gold, which rose 0.4 per cent on Monday, was little changed at $1,138.45 on Tuesday.

Oil pulled back on Tuesday as traders began to unwind positions in the run-up to the holiday season.

US crude slid 0.4 per cent to $51.92 per barrel after closing up 0.4 per cent on Monday.

Global benchmark Brent slipped 0.2 per cent to $54.82.

© Thomson Reuters 2016