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RPT-GLOBAL MARKETS-Dlr steady below 1-mth high, stocks up

Published 11/04/2009, 02:37 AM
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* Dollar steady below one-month high, eyes on Fed

* Asian stocks gain after several days' fall, metals help

* Oil inches lower after Tuesday surge; gold eases (Repeats to more subscribers)

By Elaine Lies

TOKYO, Nov 4 (Reuters) - The dollar steadied below a one-month high against a basket of currencies on Wednesday, while Asian stocks edged higher in muted trade ahead of a policy announcement from the U.S. Federal Reserve that kept investors wary.

Oil fell for the first time in three days after a 2 percent surge on Tuesday and gold eased after hitting a record high, but the afterglow helped boost resource-linked stocks around Asia, with metals shares helping lead Chinese stocks to a nearly three-month intraday high.

European stock futures pointed up, while U.S. stock futures rose.

Most investors turned their attention to upcoming policy statements from the Fed, European Central Bank and the Bank of England.

The U.S. central bank, which ends its two-day meeting on Wednesday. it is expected to keep interest rates unchanged, but some in the market wonder if it might drop or alter its pledge to keep rates low for an "extended period". [ID:nFEDAHEAD]

"The biggest focus regarding the result of the FOMC meeting is the time frame for the U.S. low interest rate policy," said Soichiro Monji, chief strategist at Daiwa SB Investments.

"Eyes are on whether and how the word 'extended' will be used in the statement. Higher rates would be generally negative for stocks."

But several traders and analysts said they doubted the Fed statement would show it materially altering its stance.

The dollar lost 0.2 percent to 76.233 against a basket of currencies <.DXY> after climbing as far as 76.817, its highest since early October, while the Aussie fell after Australia's September retail sales were much weaker than expected and dampened hopes for a December rate hike. [ID:nSYD529174]

The dollar rose 0.2 percent on the yen at 90.48 yen .

STOCKS RISE

Stock markets gained, although rises were muted for the most part as investors awaited clues to the timing of eventual shifts in central banks' policies. But Seoul shares climbed 1.9 percent, led by Korea Exchange Bank <004940.KS> on strong results.

Australian shares <.AXJO> briefly turned negative as the weak retail sales data hit shares of supermarket chains but subsequently closed up 0.2 percent, buoyed by banks and miners.

Hong Kong shares <.HSI> rebounded from a two-day fall on bargain-hunting, while China's key stock index rose 0.3 percent by 0651 GMT.

A top executive at Fortis Investments said his company is bullish on equities and high yield bonds despite significant rallies in both asset classes as it sees a continued recovery in the global economy amid a low interest rate environment. [ID:nHKG159199]

The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> rose 1.6 percent, its second rise over the past eight sessions.

Japan's Nikkei closed up 0.4 percent with retailer Fast Retailing <9983.T> climbing 4.4 percent after sales at its Uniqlo casual-clothing chain in Japan surged 35.7 percent in October from a year earlier. [ID:nT73789]

EYES ON BANK MEETINGS

But overall share gains were limited in the wake of a mixed performance by U.S. markets.

The S&P 500 and Nasdaq rose slightly on Tuesday as news of a major railroad acquisition helped sentiment, but the Dow edged lower on caution ahead of the FOMC meeting.

Markets are also holding their breath ahead of European bank meetings. The European Central Bank and the Bank of England are expected to keep rates unchanged on Thursday.

Gold eased slightly as investors took profits a day after it hit record highs, though sentiment remained good on bullion's growing status as a destination for diversifying official reserves.

Spot gold was hovering below New York's notional close of $1,084.50. On Tuesday, spot gold hit an all-time high of $1,087.45. [GOL/]

U.S. crude oil futures fell for the first time in three days on Wednesday, inching down towards $79 a barrel after industry data showed a larger than expected build in U.S. gasoline inventories and a surprise build in distillate supplies.

NYMEX crude for December delivery lost 13 cents to $79.47 a barrel by 0210 GMT, after settling up $1.47 at $79.60 on Tuesday. (Additional reporting by Aiko Hayashi in TOKYO, Jun Ebias and Claire Zhang in HONG KONG/SHANGHAI; Editing by Kazunori Takada)

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