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RPT-GLOBAL MARKETS-Asia stocks hit 2009 highs, U.S. dollar slips

Published 09/15/2009, 10:49 PM
Updated 09/15/2009, 10:51 PM

(Repeating to additional subscribers with no changes to text)

* MSCI index of Asia-Pacific shares minus Japan at 2009 high

* Asian and commodity currencies up at expense of dollar

* Dollar expected to test lows against yen - analyst

By Anirban Nag

SYDNEY, Sept 16 (Reuters) - Asian shares hit their highest levels for 2009 on Wednesday after upbeat U.S. economic news gave riskier assets leveraged to global growth a boost, while the U.S. dollar slipped to a one-year low. Most major Asian stock indexes posted gains of 1 percent or more in the wake of Tuesday's strong reading on U.S. retail sales. Japan's benchmark Nikkei climbed 111.31 points to 10,328.93. The broader Topix rose 0.75 percent to 939.48. Many regional currencies likewise did well, especially those of big commodity exporters such as Australia, largely at the expense of the U.S. dollar.

"As the global recovery continues and risk diversification takes place we could see the U.S. dollar stay under pressure for the next six months," said Amber Rabinov, economist, foreign exchange and international economics at ANZ in Sydney.

Measured against a basket of major currencies the dollar slipped as deep as 76.406, the lowest since last October, while the euro came within a whisker of its 2009 high at $0.4681.

The dollar also eased to 90.95 yen amid talk investors were using the dollar for carry trades. Until recently, the low-yielding yen was the currency of choice for investors who borrow cheap to buy riskier assets or high-yielding currencies. But that has changed since 3-month U.S. LIBOR rates fell below Japanese rates.

"We expect the dollar to test its recent lows on the yen, and probably fall as low as 87 yen as talk of it replacing the yen as a funding currency gathers momentum," said Rabinov.

AUSSIE RESOURCES IN DEMAND

The brighter outlook for global growth helped an Australian share market packed with resource exporters. The benchmark S&P/ASX 200 index jumped 2 percent to a year-high of 4,633.4, with mining giant BHP up 1.9 percent.

The MSCI index of Asia-Pacific shares excluding Japan rose 1.3 percent, its highest this year. The MSCI benchmark is now up about 53.5 percent for the year.

The Bank of Japan began a two-day policy meeting, but analysts aren't holding their breath for the outcome given rates are already near zero and policymakers are reluctant to go any further with exceptional easing measures.

Still, investors are busy trying to second-guess the likely economic policies of the new government.

Japan's new prime minister, Yukio Hatoyama, takes office on Wednesday and is expected to announce his cabinet line-up after a huge election win on Aug. 30.

The gains for Asian came courtesy of better U.S. news.

Tuesday's data on retail sales showed a jump of 2.7 percent in August, the fastest pace of growth in 3-½ years.

Federal Reserve Chairman Ben Bernanke felt confident enough to declare the U.S. recession "very likely over".

The rise in sales added to expectations U.S. economic growth would stage a sizable rebound in the third quarter, thanks in part to businesses rebuilding inventories to meet demand.

The Dow Jones industrial average gained 56.61 points to 9,683.41, while the Standard & Poor's 500 Index ended 3.29 points up at 1,052.63. (Additional reporting by Anirban Nag) (Editing by Dean Yates)

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