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GLOBAL MARKETS-Asian Stocks ease, dollar up as risk shunned

Published 11/19/2009, 02:55 AM
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* Asia-Pacific stocks ease on recovery doubts, Japan suffers

* Rupiah leads Asian FX lower on capital control fears

* US dollar decline takes a breather; Aussie falls 3rd day

* Gold slips on profit taking but record high is close

By Kevin Yao and Kevin Plumberg

HONG KONG, Nov 19 (Reuters) - Asian stocks eased on doubts about the pace of economic recovery, while the Indonesian rupiah and the Idian rupee fell on concerns over official steps to curb capital flows after Brazil's latest move to limit the rise of its currency.

Gold edged down as the dollar gained some ground against the euro and other major currencies, taking a breather after hitting a record above $1,150 per ounce the previous day.

After gains of nearly 70 percent in Asian equities so far this year, investors are likely prone to taking profits before year-end.

A six-month low in U.S. housing construction in October and news this week that Mitsubishi UFJ Financial Group, Japan's largest bank, will have to raise $11 billion in new shares to meet stricter capital requirements have underscored how the climb back from the worst economic crisis in generations will be slow.

"With the capital raisings, the yen's strength and politics, there is three times the pain," said Tomomi Yamashita, a fund manager at Shinkin Asset Management,

The Nikkei share average fell 1.3 percent to the lowest since July 21, also on concerns over the government's fiscal policies.

The MSCI index of Asia Pacific stocks outside Japan fell almost 0.3 percent but still hovered near a 15-month high reached on Tuesday, The Thomson Reuters index of regional shares was down around 0.5 percent.

U.S. stocks futures were down 0.3 percent, indicating a lower open later in the day.

The dollar rebounded the against the euro and the yen gained against high-yield currencies as investors, spooked by weaker equities performance and fears of capital controls in emerging markets, unwound positions in riskier assets.

The high-yielding Australian dollar eased 0.3 percent to $0.9260 after touching the highest since Aug 1, 2008 on Monday, above $0.9400.

CAPITAL CONTROLS

Market fears over possible capital curbs by Indonesia have eased after the central bank on Wednesday played down the threat of immediate curbs, but investors sentiment was hurt by Brazil's move to curb capital inflows, traders said.

Brazil took another step on Wednesday to try to contain the appreciation of its currency, unveiling a 1.5 percent tax on certain trades involving American Depositary Receipts issued by Brazilian companies.

The Indonesian rupiah fell 1 percent to 9,510 per dollar, prompting the central bank to intervene to support the unit, which remained the best performing currency in Asia.

The Indian rupee slipped 0.7 percent to 46.51 per dollar as investors worried that authorities there may start looking at steps to temper surging capital inflows.

Taiwan has banned foreigners from investing in time deposits and South Korea announced measures on Thursday aimed to tightening controls over currency liquidity to make the banking system less vulnerable to the capital flight.

But analysts believe most Asian countries will refrain from imposing harsh measures to stem hot money inflows that could distort policy signals, but market jitters could persist.

"Few things scare a foreign investor more than the thought that the rules could be changed on them after they have invested and they will be either unable to access their funds easily or will be suddenly driven out," said Westpac strategist Sean Callow.

"Given that it is so widely expected that USD/Asia will decline for many months and quarters to come, investors will wonder why would the flurry of restrictions and proposals end here?" he added.

U.S. crude for December delivery was down 0.3 percent to $79.40 a barrel, after being unable to settle above $80 for a 10th consecutive session. (Additional reporting by Masayuki Kitano in TOKYO; Editing by Kazunori Takada)

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