SINGAPORE |
SINGAPORE (Reuters) - The dollar fell to a three-week low against the yen on Tuesday, with gains in the Japanese currency pulling Tokyo stocks lower, while the euro came under renewed pressure as Europe struggled to contain its debt crisis.
A flat close on Wall Street offered stock markets little inspiration, while resurgent fears of an imminent Chinese interest rate rise kept investors on the defensive.
In Japan, the benchmark Nikkei average .N225 was dragged down by the strength of the yen, and a Reuters poll showed the mood among Japanese manufacturers darkened in late November and is expected to grow even gloomier in the coming months as a strong yen and the global slowdown eat into profits.
"The impact of a strong yen, slowing exports and declines in profits weighed on corporate sentiment and companies are growing more cautious about the outlook," said Yoshimasa Maruyama, an analyst at Itochu Corp.
The Nikkei fell 0.4 percent, though Sumitomo Corp (8053.T) and Mitsubishi Corp (8058.T) outperformed the broader index on reports they are making moves to expand their rare earths businesses. Non-Chinese sources of the hi-tech minerals are much in demand, on worries the world's biggest supplier may in future restrict exports.
MSCI's gauge of Asian stocks excluding Japan .MIAPJ0000PUS rose 0.4 percent, taking its gains for the year to over 12 percent versus 7.5 percent for the MSCI world index.
Asia has been one of the chief beneficiaries of flows of capital from the United States, where the Federal Reserve is pursuing a policy of printing more cash.
But adding to the market's generally cautious tone was the belief that the cost of borrowing in China will soon rise.
China's central bank may raise rates again this weekend as it tries to contain inflationary pressures, official newspaper the China Securities Journal reported on Tuesday.
Another newspaper said Chinese bank lending had exceeded by the end of November the government's full-year loan target of 7.5 trillion yuan ($1.13 trillion), supporting arguments in favor of further credit tightening.
POLITICAL BICKERING WEIGHS ON EURO
The euro slipped in early trade before recovering to $1.3325, just above its late levels in New York on Monday, with support seen at $1.3268.
The next major market event will be the outcome of the Irish budget, due later on Tuesday, traders said., The deeply unpopular government is set to unveil a record austerity plan that will inflict more pain on voters.
"If the (Irish) parliament fails to approve proposals, we could see a fresh flare-up in euro zone tensions and the euro could fall sharply against major forex counterparts," said David Rodriguez, strategist at DailyFX.
Ireland last month received an 85 billion euro bailout from the International Monetary Fund and European Union, and markets are wondering if Portugal and Spain will be the next ones in need of rescue.
No comments:
Post a Comment