GLOBAL MARKETS-Asia shares slip, dollar stays under pressure

Thu Sep 12, 2013 2:28am EDT

* European shares seen higher on output data outlook
    * New Zealand dollar jumps on RBNZ's hawkish rate outlook
    * Australian dollar plunges on employment data surprise
    * Stronger yen, downbeat machinery orders data help sink
Nikkei

    By Lisa Twaronite
    TOKYO, Sept 12 (Reuters) - Asian shares surrendered earlier
gains while the dollar remained under pressure on Thursday,
facing growing expectations that the U.S. Federal Reserve's
impending stimulus reduction might be smaller than some had
believed.    
    The waning likelihood of an immediate U.S. military strike
on Syria also continued to undermine the dollar as diplomatic
efforts to place Syria's chemical weapons under international
control intensified. 
    European stocks are seen edging up, as investors bet euro
zone industrial production data due during the session will
confirm the region's economic recovery is on track.
    Financial spreadbetters expect Britain's FTSE 100 to
open around 2 points higher, or up 0.03 percent; Germany's DAX
 to open 23 points higher, or up 0.3 percent; France's
CAC 40 to open 7 points higher, or up 0.2 percent. 
    MSCI's broadest index of Asia-Pacific shares outside Japan
 shed 0.2 percent. 
    A stronger yen and downbeat economic data helped push
Japan's Nikkei stock average down 0.3 percent. While the
Nikkei is still up nearly 40 percent so far this year, making it
the top performer among major developed markets in local
currency terms, although some foreign investors remain sceptical
on the country's ability to sustain long-term growth.
 
    Data released earlier on Thursday showed Japan's core
machinery orders were unexpectedly flat in July, a weak spot in
a run of strong recent data and a reminder that firms are still
not sufficiently confident of the economy's recovery to
aggressively increase capital expenditure.    
    The Fed's next move remains a key focus for global markets.
The Federal Open Market Committee meets next Tuesday and
Wednesday and is widely expected to begin scaling back its $85
billion monthly asset-buying programme. Friday's disappointing
U.S. jobs data, though, prompted many to believe the reduction
will be modest. 
    "With threats of an immediate U.S. attack on Syria
subsiding, market focus is moving to the Fed's meeting. The
market's conviction that the Fed will go ahead with reducing
stimulus has weakened a little bit after the payroll data last
week," said Katsunori Kitakura, associate general manager of
market-making at Sumitomo Mitsui Trust Bank in Tokyo.     
    A Reuters survey earlier this week showed most economists
see the U.S. central bank trimming its monthly asset purchases
by about $10 billion.  
    
    The dollar index slipped slightly to 81.485, after
having fallen below its 200-day moving average on Wednesday,
moving away from a seven-week high of 82.671 hit on Sept. 5.  
    The dollar bought 99.48 yen, down about 0.4 percent.
It moved away from Wednesday's high of 100.60 yen, which was the
highest since July 22, according to Reuters data.
    The euro was slightly down at $1.3308 after rising as
high as $1.3324 on Wednesday, its highest since Aug. 29.  
    Reduced expectations of Fed tapering have eased pressure on
emerging market currencies that recently sold off amid fears of
capital outflows. That bought some time for the central banks of
Indonesia, the Philippines and South Korea, which all have to
consider the impact of eventual Fed stimulus reduction.
 
    South Korea's central bank kept interest rates unchanged for
a fourth consecutive month on Thursday, as expected. 
    Markets like Brazil and India, which must import capital to
finance spending, will feel the effects of the reduction more
than countries such as Mexico and South Korea, which are less
dependent on foreign funds. 
    One regional standout was New Zealand's currency, which
jumped to a four-week high of $0.8151 after the Reserve
Bank of New Zealand held its benchmark cash rate steady at 2.5
percent as expected. It said it would likely hold interest rates
for the rest of the year but that rates would start to rise by
mid-2014. 
    "As these are the most hawkish comments that we have heard
from a major central bank, investors could start to see the New
Zealand dollar in a new light and drive the currency up another
3 to 5 percent," BK Asset Management managing director Kathy
Lien said in a note to clients. 
    But the Australia dollar went the other way, after a
surprising drop in employment in August pushed the jobless rate
up to a four-year high and revived the chance of a cut in
interest rates. The Aussie earlier touched a six-month high of
$0.9353 before the data, but was last down about 0.8 percent at
$0.9251.
    "It's a bit of tempering of that optimism that emerged about
the economic outlook in the last few weeks," Michael Blythe
chief economist at Commonwealth Bank, said after the jobless
data.    
    On the commodities front, copper slipped 0.3 percent to
$7,148.75 a tonne, on subdued interest ahead of next
week's Fed decision. An improved outlook for China's economy and
reduced risk of a U.S. strike on Syria have helped bring copper
prices off the three-year lows plumbed in late June, but supply
concerns remain.
    Gold skidded 0.5 percent to $1,358.06 an ounce, after
hitting a low of $1,354.10 - its weakest since August 20 - as a
U.S. strike on Syria looked less likely.  
    Oil was slightly higher, with Brent crude adding
about 0.1 percent to $111.61. Brent prices spiked above $117 a
barrel in late August on the virtual shutdown of Libyan oil
output and the prospect of U.S. military action against Syria.
    Saudi Oil Minister Ali al-Naimi said on Thursday that the
global oil market is well balanced and top exporter Saudi Arabia
is ready to supply whatever volume of crude is needed to meet
demand.