RPT-GLOBAL MARKETS-Asian stocks rally, dollar hits 5-month low

Published 09/26/2010, 11:52 PM
Updated 09/26/2010, 11:56 PM

(Repeats to more subcribers)

* Asian stocks at two-year high after U.S. data cheer

* Nikkei rises 1.4 percent

* Dollar at 5-month low vs euro, dips vs Asian currencies

By Ron Popeski

SINGAPORE, Sept 27 (Reuters) - Asian stocks rose on Monday to their highest in more than two years in response to optimism on the U.S. economy, while the dollar dipped to five-month lows against the euro.

Markets climbed broadly, but analysts said that data showing increased U.S. business spending, which prompted a rise on Wall Street last Friday, were far from unequivocal.

Suggestions that the Federal Reserve might further resort to quantitative easing to stimulate the economy kept the dollar in check. It lost ground throughout the region.

The index of Asian stocks ex-Japan <.MIAPJ0000PUS> climbed 1.05 percent, hitting its highest point since June 2008. In Tokyo, the benchmark Nikkei rose 1.4 percent, buoyed by exporters after the Wall Street jump, but traders said gains were capped by the yen's enduring strength.

Shares of consumer lenders plunged after media said struggling Takefuji Corp <8564.T> was preparing for bankruptcy protection. Analysts discounted fears that this would seriously affect the Nikkei but also said any rises would also be limited.

"Wall Street's rise has provided a bit of a boost but gains on the U.S. data are mainly because the figures weren't quite as bad as expected, not that they were really good," said Takashi Ushio, head of the investment strategy division at Marusan Securities. "So gains on this alone will be limited."

Seoul shares also posted gains, though these were mitigated by pressure on Hyundai Motor, South Korea's top carmaker, which announced it was recalling some 139,500 Sonata sedans sold in the United States. Hyundai declined 2.17 percent.

RISE IN BUSINESS SPENDING

Economic reports on U.S. durable goods orders and home sales were mixed on Friday, but traders focused on a rise in business spending in August as the latest sign of a firmer recovery.

Wall Street gained almost 2 percent, putting U.S. stocks on course for four weeks of gains.

But subdued home sales and signs that manufacturing growth was slowing reinforced the view that the Fed may provide more monetary support to help the economy.

On Monday, the dollar was subject to further pressure.

It hovered near five-month lows to the euro and eight-month lows against a basket of currencies, pausing after steep losses last week and keeping the euro from pushing to new highs against $1.3500 .

The dollar, quoted at 84.24 yen at 0230 GMT, was hurt on Friday by stronger-than-expected data in Europe and expectations of further easing by the Federal Reserve.

One trader at a Japanese bank said dollar/yen would be caught between caution over another intervention by Japanese authorities and possible dollar selling by Japanese exporters ahead of the end of the first half of Japan's fiscal year.

"But even if stops near 84.00 yen are hit, I don't think we're in a market where the dollar will keep falling rapidly," he said. "It's scary to sell the downside."

Japan intervened on Sept. 15 minutes after the dollar hit a 15-year low of 82.87 yen, selling an estimated 2 trillion yen ($23.7 billion), its largest single-day yen selling intervention.

The euro stood at 1.3466 after rising as far as $1.3496 on Friday, its strongest since late April.

Oil on Monday climbed to near $77, the highest level since mid-September, extending last week's rally as energy and commodities regain the favour of investors with a weaker dollar and resurfacing risk appetite. (Editing by Tomasz Janowski)

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