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RPT-GLOBAL MARKETS-Asia stocks weighed by tech, US dollar sags

Published 10/07/2010, 03:22 AM
Updated 10/07/2010, 03:28 AM
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* Resource shares lift stocks, US jobs data awaits

* U.S. dollar weakness is the global focus

* Australia dollar at 27-year high after strong jobs data

* Gold hits record high above $1,350 an ounce

* Samsung's dour guidance weighs on tech sector

By Kevin Plumberg

HONG KONG, Oct 7 (Reuters) - Asian stocks steadied on Thursday after hitting a two-year high, capped by weakness in the technology sector, while the dollar fell ahead of a U.S. payrolls report due on Friday.

European shares edged lower in early trade, giving up a little of the previous two sessions' gains, and ahead of interest rate decisions and policy indications from the Bank of England and European Central Bank. The FTSEurofirst 300 index of top European shares was down 0.3 percent.

Meetings of the European Central Bank and Bank of England on Thursday will be watched for any hint that, like the Federal Reserve and Bank of Japan, policymakers are warming up to using newly printed money to buy assets.

After data overnight showed U.S. private sector employment surprisingly shrank in September, the potential has increased for the official payrolls report to reflect weakness and accelerate what has become the cheap money trade: sell dollars, buy bonds, equities and gold.

This trade has been driven by expectations that the Fed at its policy meeting next month will shift toward quantitative easing (QE), effectively flooding the financial system with cheaply borrowed cash.

The greater chance of a soft U.S. payrolls number made the dollar's disadvantages all the more stark, especially after data showed Australian employment in September was more than double forecasts, driving the Australian dollar to the highest against the U.S. dollar in 27 years.

Japan's Nikkei share average slipped 0.1 percent, but was still up around 3 percent on the week. After Tuesday's unexpected rate cut by the Bank of Japan, the index is outperforming the U.S. S&P 500 index and the FTSEurofirst 300 index, which are both up 1.2 percent so far this week.

"The BOJ's easing lifted share prices, but now investors are focusing on the U.S. jobs data to determine the Fed's next action," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

The MSCI index of Asia Pacific stocks outside Japan was up 0.28 percent to the highest since June 2008.

The 11.6 percent rise in the index last month exceeded the all-country world index by two percentage points and has been driven by the consumer discretionary, energy, industrial and materials sectors.

The technology sector was under pressure on Thursday after Samsung Electronics Co, the world's largest memory chip maker, guided the market's earnings expectations for the firm lower. Samsung shares fell 2.4 percent and the region's tech sector slipped 0.6 percent on fears the company's outlook was foreboding ahead of results due next week from Intel and Advanced Micro Devices.

Investors remain focused on the U.S. dollar, which fell 8.5 percent against a basket of major currencies in the last quarter.

Goldman Sachs analysts revised their forecasts for the dollar downward, expecting Asian currencies to shoulder more of the burden of currency strength in coming months.

"The combination of weaker growth, more QE, FX policy pressure on Asia for more currency appreciation and widening external imbalances all point in the same direction: broad USD weakness. And this is likely to remain the dominant theme," the analysts said in a note.

The euro has benefited from the dollar's weakness and hit an eight-month high of $1.3949 overnight. It was testing those highs, changing hands at $1.3940.

The dollar was trading at 82.80 yen, not far from the 15-year low of 82.75 yen plumbed on Wednesday.

Precious metals have been other beneficiaries of dollar weakness. Gold jumped to an all-time high of $1,356.40 an ounce after Vietnam's central bank said it may allow imports of the metal if prices keep rising. (Additional reporting by Chikafumi Hodo in TOKYO)

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