GLOBAL MARKETS-Yen stuck near 4-year low vs dollar, stocks dip
LONDON, Jan 30 (Reuters) - The yen wallowed near a four-year low against the dollar on Tuesday as weak data cast doubt on the likelihood of Bank of Japan interest rate hikes, while higher bond yields and lower copper prices hit European stocks.
The yen eased as a sharper-than-expected fall in household spending and a slight rise in the jobless rate last month underscored the challenges facing Japanese consumers.
Other data from Japan showed capital spending continues to underpin growth but after recent soft numbers on retail spending and inflation, markets are speculating the BOJ will stick with a wait-and-see approach on rates when it meets next month.
"People are wondering how come stronger activity, particularly industrial production, is not feeding through into consumption. People are scratching their heads over that and it is a difficult environment for the BOJ to be raising rates in," Chris Turner, head of FX strategy at ING, said.
The U.S. Federal Reserve begins a two-day meeting on Tuesday and is seen near certain to leave rates unchanged, a stance the market now expects it to keep for most of 2007 as a dip in the U.S. economy appears likely to prove shallow and short-lived.
The dollar was up 0.1 percent on the day at 121.85 yen JPY=, having hit 122.19 yen the previous day, its strongest since December 2002, according to Reuters data.
The euro was also up 0.1 percent at 157.85 yen EURJPY=R at 1023 GMT, and was flat at $1.2955 EUR=.
SHARES MIXED
The weaker yen supported Japanese exporters shares', helping lift the Nikkei average .N225 0.1 percent to 17,617.6 points.
European shares dipped, with the FTSEurofirst 300 .FTEU3 0.1 percent lower at 1,515.5 points.
"The recent pick-up in bond yields is putting valuations of European markets under pressure and stocks are losing some of the yield support they have had," said Mislav Matejka, a European equity strategist at JP Morgan.
Yields on 10-year euro zone government bonds EU10YT=RR hit a seven-month high on Tuesday as investors awaited fresh debt supplies and the Fed's statement on Wednesday.
Among stocks on the move in Europe, German industrial conglomerate Siemens (SIEGn.DE) rose 3.8 percent after positive notes from two brokers, while Air France-KLM (AIRF.PA) gained 4.3 percent after electing not to bid for Alitalia AZPIa.MI.
Miners Anglo-American (AAL.L) and BHP Billiton (BLT.L) were among the worst performers, both falling more than 1 percent as weaker copper prices weighed.
Copper for three month delivery MCU3 fell almost 4 percent on Monday after building stockpiles dented sentiment but edged up on Tuesday after latest data showed a fall in inventories.
COMMODITY CHALLENGES
Commodities have had a volatile start to the year, with big fluctuations in performance from day to day and asset to asset.
Nickel and tin have climbed to record highs, while gold has held its ground but both copper and crude oil are down more than 11 percent already in the first month of the year.
U.S. light crude CLc1 steadied at $54 a barrel after falling $1 overnight as markets balanced an expected rise in U.S. crude inventories and signs of OPEC producers raising March output with forecasts for lower distillate fuel stocks after cold weather in the U.S. Northeast.
Gold XAU= hovered around $642 an ounce as investors awaited the Fed's assessment of the U.S. economy.
"The market obviously perceives that (the Fed) are going to come out and say they are still highly on inflation watch ... If that's the case, then obviously that's dollar positive," said Darren Heathcote of Investec Australia in Sydney. "That would probably help to put a cap on gold prices for the time being."
