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RPT-GLOBAL MARKETS-Dlr jumps on short-covering, Asia shares dip

Published 12/17/2009, 02:44 AM
GC
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* Year-end position unwinding lifts dollar

* Breach of chart levels and stops add to dollar's rise

* Dlr hits 3-mth high vs euro, 2-mth peak vs Aussie

* Calm reaction to Fed's cautiously upbeat statement

* Asian shares, oil and gold edge lower (Repeats to more subscribers)

By Masayuki Kitano

TOKYO, Dec 17 (Reuters) - The dollar surged broadly and hit a three-month high against the euro on Thursday on short-covering ahead of the year-end, while Asian stocks and other risky assets inched lower.

There was limited reaction to the Federal Reserve's post-meeting statement on Wednesday, in which the U.S. central bank voiced optimism about a stabilising economy.

The Fed left the benchmark interest rate near zero as expected and reaffirmed the rate will be low for some time. It also reminded markets that it will let most of its special liquidity expire by early next year. [ID:nN16119711]

The dollar rose on year-end position unwinding, adding to its gain for the month. Gains in the currency have been helped by data showing slowing U.S. job losses and improving consumer confidence.

The Fed's statement, which highlighted an improvement in housing and noted last month's decline in the unemployment rate, did little to alter the dollar's firmness of recent weeks.

"They are just coming out and saying things are looking a bit better. There is nothing in there that really challenges a slightly more upbeat view of the U.S. economy," said Adrian Foster, Rabobank's head of financial markets research Asia-Pacific in Hong Kong.

The euro, which has slid nearly 4 percent against the dollar so far this month and is on track for its biggest one-month fall since January, hit a three-month low of $1.4369 on trading platform EBS.

Its slide gained steam after breaching strong support at $1.4500 and hitting stop-loss sell orders. It was at $1.4418, down 0.9 percent.

The dollar advanced broadly, hitting a three-month high of 77.609 against a basket of currencies <.DXY>, a three-month peak against the Swiss franc and a two-month high against the higher-yielding Australian dollar .

Asian shares slipped, with the MSCI's index of Asian stock markets outside Japan falling 1.1 percent to 400.23 <.MIAPJ0000PUS>, pulling away from a roughly 15-month peak of 416.89 struck in mid-November.

Japan's Nikkei share average <.N225> ended down 0.1 percent, slipping from seven-week highs hit earlier in the day, as investors pocketed profits on a rally in big banks such as Mitsubishi UFJ Financial Group <8306.T>.

Weakness in financial shares also weighed on Hong Kong's stock market, which slipped 1.2 percent <.HSI>. South Korean shares slipped 1 percent <.KS11>, with losses by brokerages weighing on the index.

Oil lost 0.3 percent to $72.41 a barrel and gold prices dipped around 0.8 percent on the day to around $1,128 per ounce .

U.S. Treasuries rose, supported by softer stock markets. The benchmark 10-year Treasury note rose around 7/32 in price to yield 3.573 percent down about 3 basis points from late U.S. trading on Wednesday. (Additional reporting by Satomi Noguchi; Editing by Kazunori Takada)

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