* Yen slides to 101.62 against dollar
* Upbeat U.S. data, Japanese bond buys drive move
* German Bunds fall as safe-haven demand dented
* European shares hit five-year highs
By Herbert Lash
NEW YORK, May 10 The yen on Friday slid to its
lowest against the dollar since October 2008 as its decisive
break through the 100 yen mark triggered a drop in the price of
safe-haven U.S. and German bonds.
Wall Street opened mostly higher, following a rise in
European equities, but a measure of global equity markets was
Crude oil tumbled as rising supplies and doubts over China's
economy outweighed signs of a resilient U.S. economy. A firmer
dollar also pressured oil.
The yen fell on data showing Japanese investors were buying
more foreign assets, while the greenback rallied broadly as U.S.
data sparked talk the Federal Reserve may scale back monetary
With the Japanese currency breaching the 100 level, analysts
expect the yen to fall further. Some see the dollar rising to
105 yen this summer and to 110 yen by the end of the year.
"The break of the 100-yen level unleashed the animal
spirits," said Marc Chandler, global head of currency strategy
at Brown Brothers Harriman in New York.
Overnight, data showed that Japanese investors turned net
buyers of foreign bonds in the last two weeks. They bought 309.9
billion yen ($3.1 billion) in foreign bonds in the week through
May 4 after purchasing 204.4 billion yen in the prior week,
according to the Ministry of Finance.
German Bunds fell to their lowest in over a month as Bund
futures, which hit a record high of 147.20 last week,
fell more than a point on the day to 144.93 and were on course
for their biggest one-week fall since March 10.
The benchmark 10-year U.S. Treasury note was
down 14/32 in price to yield 1.8618 percent.
The slump in the Japanese currency was sparked by a drop in
weekly U.S. jobless claims data on Thursday, which added to
evidence of a rapidly improving employment market first seen in
last week's nonfarm payrolls report.
The move was given a further push by the data on Japanese
investors' foreign bond purchases. The data confirmed widespread
expectations that the Bank of Japan's aggressive stimulus plans
would result in a massive flight of money out of the country in
a search for higher yielding investments.
"We've had back to back good news in U.S. figures and you
have to wind the clock back six to eight weeks to find the last
time we had that," said Nick Parsons, head of market strategy at
National Australia Bank.
"Once we got through a 100 (yen) and the Japanese bond
buying data came out, that added fuel to the fire," he said.
The yen's move came as finance ministers and central bankers
of the G7 countries gathered for a two-day meeting near London,
to discuss ways to stimulate growth, with currency movements
likely to be one of the main topics on the agenda.
Wall Street resumed a recent rally, after a hiatus on
Thursday, on track for a third straight week of gains. A pair of
strong corporate earnings helped the Nasdaq register a small
Nvidia Corp and Priceline.com Inc led the
Nasdaq's rise a day after their results. Both companies beat
profit expectations, even as Priceline gave a second-quarter
outlook that disappointed.
"We're getting more constructive on the second half of the
year as both the market and the economy are picking up," said
Terry DuFrene, investment specialist for JP Morgan Private Bank
in New Orleans.
"While it has caught us by surprise how much markets have
come up, and we might see a decline of 5 percent, we don't see
any meaningful pullback ahead," DuFrene said.
The Dow Jones industrial average was up 22.00 points,
or 0.15 percent, at 15,104.62. The Standard & Poor's 500 Index
was up 4.38 points, or 0.27 percent, at 1,631.05. The
Nasdaq Composite Index was up 17.80 points, or 0.52
percent, at 3,426.97.
MSCI's world equity index, which tracks
stocks in 45 countries, was down 0.21 percent but is on course
to end its third week of gains at a five-year high.
The FTSEurofirst 300 index of leading European
shares was up 0.3 percent at 1,232.65 points.
Brent crude oil was on the verge of tumbling below
$102 a barrel, falling $2.39 to $102.08. U.S. crude eased
$2.51 to $93.88 a barrel.