Asian Shares Push Higher, Dollar Languishes

Tokyo: Asian shares rose on Tuesday, while the dollar languished after investors locked in some gains on its recent rally.

The lacklustre mood was seen spreading to Europe, where financial spreadbetters expected Britain's FTSE 100 to open 1 to 3 points higher, or up 0.05 points; Germany's DAX to open 35 points lower, or down 0.4 per cent; and France's CAC 40 to open 11 to 12 points lower, or down 0.3 per cent.

"European equities are set to edge lower tracking modest declines in the US overnight. The small negative start belies the huge amount of uncertainty in the markets at the moment," Capital Spreads dealer Jonathan Sudaria said in a note.

MSCI's broadest index of Asia-Pacific shares outside Japan was up about 0.3 per cent in late afternoon trade, after wobbling between positive and negative territory as it took its cues from a choppy, losing session on Wall Street overnight.

Japan's Nikkei stock average ended down 0.7 per cent, after the Bank of Japan offered a bleaker view on factory output. The BOJ maintained its massive asset buying programme, as widely expected.

The BOJ's policy meeting on Tuesday was interrupted because Governor Haruhiko Kuroda was summoned to speak in parliament, a rare event that last happened in September 1998.

Japanese stocks turned positive after Kuroda told a parliament committee meeting in the morning that a weak yen, as a whole, has a positive effect on Japan's economy if the currency's move reflects economic and market fundamentals.

"There were concerns about a negative impact of the weak yen on the economy as well, so his comment was assuring," said Nobuhiko Kuramochi, a strategist at Mizuho Securities.

But Japanese Prime Minister Shinzo Abe said on Tuesday that a weaker yen burdens households and small firms by increasing fuel prices, and his comments pushed down the greenback.

The dollar gave up about 0.2 per cent to 108.62 yen, moving away from a six-year peak of 110.09 yen marked last week.

The euro fell 0.2 per cent on the day to $1.2624, heading back in the direction of a more than two-year low of $1.2501 set on Friday, after the US non-farm payrolls report fuelled speculation that the Federal Reserve will hike interest rates by mid-2015.

Currency investors had a muted reaction to Monday's disappointing report on German industrial orders, which fell 5.7 per cent in August to mark their biggest monthly drop since 2009. The data pressured euro zone bond yields and sent 10-year Bund yields close to record lows.

The dollar index, which tracks the greenback against six major currencies, narrowly slipped to 85.882 after marking its biggest one-day fall since July 2013 on Monday. The index rose to a four-year high of 86.746 on Friday, and logged a record 12 straight weeks of gains in which it rose about 7.7 per cent.

The Reserve Bank of Australia held its cash rate steady at 2.5 per cent at its regular policy review on Tuesday, and said that its currency remains high by historical standards.

The Australian dollar initially slipped after the announcement, but was up about 0.1 per cent at $0.8773 in late trading.

The dollar's weakness helped bolster recently slumping crude prices. Brent edged down about 0.1 per cent on the day to $92.70 a barrel.

Gold eased about 0.1 per cent to $1,204.66 an ounce. In a volatile session on Monday, it marked its biggest one-day gain in two months, after first bumping to a 15-month low.

Copyright: Thomson Reuters 2014