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GLOBAL MARKETS-Asia shares ex-Japan down, dlr steady

Published 09/24/2009, 12:05 AM
Updated 09/24/2009, 12:06 AM
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* Asia shares ex-Japan down, mirror U.S. caution

* Dollar steady after Fed comments

* Gold bounces back to $1,010 an ounce

By Susan Fenton

HONG KONG, Sept 24 (Reuters) - Asian shares outside Japan fell on Thursday, mirroring investor caution in the United States, while the dollar was steady after the Fed reiterated interest rates would stay low for a long period.

Japan's benchmark Nikkei index jumped 1.7 percent after a three-day holiday break, but the rise reflected gains made in the rest of the region at the start of the week.

A 0.8 percent slide in the Dow Jones on Wednesday, however, weighed on the rest of Asia's markets and the MSCI index of Asia Pacific stocks traded outside Japan was down 1.2 percent.

Shares in Korea fell more than 1 percent with some concern that a strengthening Korean won could hurt export competitiveness.

In Hong Kong, the Hang Seng Index shed 2 percent and new listing Metallurgical Corp of China, a Chinese engineering company and the market's biggest IPO so far this year, skidded nearly 15 percent below its issue price. Analysts said its price had been too high given an expected slowdown in investment in China's steel industry.

The dollar was up 0.4 percent against a basket of currencies, reflecting reasonably calm reaction after the Fed upgraded its view of the U.S. economy and indicated it was closer to pulling back on extraordinary stimulus measures while also reiterating a pledge to keep rates very low for a long period.

However, traders said its commitment to loose monetary policy means the dollar could come under renewed pressure soon as it is used to fund carry trades.

"As things stand, the Fed is in absolutely no hurry to even think about normalising policy," said Stephen Stanley, chief economist at RBS in Greenwich, Connecticut. "This remains a very dovish Fed."

SONY SURGES, JAL PLUNGES

Japan outperformed otherwise weak Asian share markets, although data showing a slump in Japanese exports last month was a further indication that economic recovery will be shaky.

Electronics maker Sony Corp surged 3.3 percent after the company said sales of the PlayStation 3 video game console jumped after a price cut last month, but Japan Airlines plunged 11.1 percent after sources said the struggling carrier might be broken up and public broadcaster NHK reported the airline may seek a public bail-out.

Markets will be eying a two-day G20 summit in Pittsburgh starting on Thursday for further clues on the health of the global economy and when governments might start rolling back support measures for economic growth.

Japanese and Korean government bonds followed U.S. Treasuries higher on the Fed's dovish stance although gains in Japanese treasuries were capped by a rising equity market.

December 10-year Japanese government bond futures rose 0.13 point to 138.68.

Gold bounced back to around $1,010 an ounce, after sliding to a New York close at $1,007.05. It has been supported by underlying weakness in the U.S. dollar and is now about 1 percent off an 18-month high reached last Thursday at $1,023.85.

Oil prices remained weak though, sliding 0.5 percent to $68.61 after shedding nearly 4 percent on Wednesday after a jump in stockpiles raised concerns about the strength of demand. (Additional reporting by Wayne Cole in Sydney; editing by Jeremy Laurence)

* For Reuters Global Investing Blog, click on

http://blogs.reuters.com/globalinvesting

* For the MacroScope Blog, click on

http://blogs.reuters.com/macroscope

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http://blogs.reuters.com/hedgehub

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