* MSCI Asia ex-Japan rises 1.5 pct, Nikkei jumps after sharp
* Markets respond to upbeat US data, but sentiment fragile
ahead of Fed meeting
* Dollar stays volatile vs yen as position unwinding
* European shares likely track Asia higher
By Chikako Mogi
TOKYO, June 14 Asian shares rebounded from
multi-month lows on Friday, as upbeat U.S. economic data calmed
frayed nerves after a bruising selloff in global markets, but
investors remained anxious ahead of next week's Federal Reserve
European stocks look set to track Asia higher, with
financial spreadbetters predicting London's FTSE 100,
Paris's CAC-40 and Frankfurt's DAX will open up
as much as 0.8 percent. A 0.1 percent drop in U.S. stock futures
hinted at a more shaky Wall Street start.
Volatility was still high in currency markets, with the
dollar at one point losing more than 1 percent from early gains
against the yen, and approached Thursday's four-month lows
against a basket of six major currencies.
Wall Street rallied more than 1 percent on Thursday and the
dollar pared losses on better-than-expected U.S. retail sales in
May and a drop in the weekly jobless benefits claims, which
signalled resilience despite fiscal tightening in America.
The better data appeared to bring some temporary relief to
markets that have been rocked by uncertainty on whether the Fed
would dial back its massive stimulus later this year. The U.S.
central bank's huge bond-buying scheme has been the main source
of rallies in broad risk assets.
Analysts expect markets to remain on edge ahead of the Fed
meeting on June 18-19.
Some investors, such as holders of U.S. Treasuries, appear
to have judged the Fed is close to paring back its $2.5
trillion, 4-1/2-year bond purchase program.
"Sentiment has improved following forecast-beating economic
data from the U.S., but caution still largely rules markets
ahead of the FOMC's meeting next week," said Kim Soon-young, a
market analyst at IBK Securities, of Seoul shares.
MSCI's broadest index of Asia-Pacific shares outside Japan
advanced 1.5 percent, but was set for a weekly
decline of 1.4 percent. It tumbled more than 2 percent at one
point to its lowest since September on Thursday and closed down
1.3 percent for its biggest daily drop in three weeks.
The dollar was down 0.4 percent at 94.98, off the
session low of 94.43 but retreating from a high of 95.80 yen set
in early Asian trading. The dollar fell to a 10-week low of
93.75 overnight, bringing it down about 8 percent from last
month's 4-1/2-year peak of 103.74 yen.
The dollar index against a basket of six major
currencies steadied just above a four-month low of 80.50 hit on
"The Fed tapering speculation is keeping equities nervous
and currencies will remain volatile until stability returns to
equities," said Koji Fukaya, FPG Securities CEO in Tokyo.
"Because yen-short and dollar-long positions had been built
to excessive levels, the reversal is deep. The yen selling was
overdone and the latest market turbulence has taken much of that
excess out," Fukaya said, adding that markets may view the
dollar around 95 yen as a comfortable level for now.
Over the past three weeks global markets from stocks to
emerging currencies were roiled by Fed Chairman Ben Bernanke
hinting at the possibility of tapering the bond-buying stimulus
if the economy continued to improve. The Chinese government's
stance to hold off from taking additional steps despite a string
of weak domestic data also heightened investor anxiety.
The World Bank this week cut its outlook for global growth,
saying the economy should expand more slowly this year than last
as it cited a deeper-than-expected recession in Europe and a
recent slowdown in some emerging markets.
China's short-term funding costs jumped to
their highest levels since January 2012, as a hardline stance by
the central bank against injecting liquidity has forced the
market to reverse expectations of monetary easing, traders said.
South Korean shares rose 0.3 percent after slumping
to a seven-month closing low on Thursday on selling by foreign
investors, while Australian shares rebounded 2.1 percent
for their biggest one-day gain in 18 months after sinking to a
5-1/2-month low the previous day.
Hong Kong shares rose from an eight-month closing low
the previous day, while Shanghai shares had a
comparatively tepid recovery from six-month lows as money rates
INDONESIA SURPRISES, NIKKEI REMAINS VOLATILE
Southeast Asian stocks also recovered, with the Philippine
index rising 3 percent after suffering its biggest loss
since October 2008 on Thursday as investors worried about a
destabilising outflow of funds when the Fed reduces its
In the strongest sign yet in regional emerging economies of
the stress being wrought by the global markets rout, Indonesia
on Thursday became the first central bank in Asia to raise its
policy interest rate since 2011.
Two other central banks -- the Philippines and South Korea,
however, decided to stand pat on Thursday.
In Japan, the stock market had another choppy session,
extending a roller coaster ride in recent weeks, hurt by the
stimulus worries and an underwhelming package of pro-growth
measures unveiled by the government.
The benchmark Nikkei stock average closed up 1.9
percent after surging more than 3 percent earlier. The Nikkei
lost 6.4 percent on Thursday, which wiped out the gains made
since the Bank of Japan's big-bang stimulus unveiled on April 4,
which had helped propel the index up to a 5-1/2-year high last
The BOJ's decision at its meeting earlier this week to skip
fresh steps to calm domestic bond market turbulence and the Fed
tapering jitters accelerated a wave of unwinding in heavily
built short-yen and long-Nikkei positions - highly profitable
bets until the latest tumult. Dwindling expectations for the
government's economic policies also and fed to negative tone.
These adjustments were exacerbated as some hedge funds
dumped assets for cash amid the global turmoil ahead of their
half-year book closing, traders said.
As the unusual confluence of factors caused both the Nikkei
and the dollar/yen to retreat to levels prior to the April 4 BOJ
move, Japan's cabinet on Friday rubber-stamped a set of measures
to boost economic growth, and Prime Minister Shinzo Abe promised
to take more steps after next month's upper house elections.
U.S. crude futures eased 0.3 percent at $96.46 a
barrel and Brent eased 0.3 percent at $104.60.
A sluggish dollar underpinned gold, which was up 0.1 percent
at $1,386.06 an ounce.