* Nikkei rallies as yen slides to five-year low on the
* Shares on defensive as Wall St worries away at Fed
* Treasury yields back up after robust retail data
By Wayne Cole
SYDNEY, Dec 13 Asian markets were mostly
restrained on Friday as investors fret over the outlook for U.S.
policy stimulus, but Japanese stocks forged ahead as the yen
slid to a five-year trough on the dollar.
The U.S. currency romped up to 103.925 yen after
finally clearing a mass of offers around 103.70/74, reaching
territory not visited since October 2008.
Any drop in the yen tends to be viewed as a positive for
Japanese exports and corporate profits, and thus for the stock
market. The Nikkei responded by rallying as much as 1.2
percent before ending 0.4 percent higher to snap three straight
sessions of losses.
Other share markets in Asia took their lead from a soft
finish on Wall Street. MSCI's broadest index of Asia-Pacific
shares outside Japan was little changed.
Financial bookmakers expected major European indexes
to open flat to modestly firmer.
Investors were wary after upbeat data on U.S. retail sales
heightened speculation the Federal Reserve might start trimming
its asset buying as early as next week.
The early taper talk has gained currency since last week's
data showed the U.S. unemployment rate dropped to a five-year
low of 7 percent in November and nonfarm payrolls expanded by a
better-than-expected 203,000 jobs.
"I suspect strong data will be a minor negative for risk
appetite, as Fed taper concerns prevail over the obvious growth
positives," said Alan Ruskin, global head of FX strategy at
Deutsche Bank in New York.
Which was why Wall Street reacted by shoving the Dow down
0.66 percent and the S&P 500 down 0.38 percent. At
the same time, yields on 10-year Treasury debt
popped back up to 2.88 percent and gave the U.S. dollar a lift.
"From a U.S. dollar perspective this is at best only a mild
positive, best played through yen and the usual emerging market
suspects," added Ruskin. "The muted market reactions suggest
nobody would be terribly surprised with a December taper, even
if the street has yet to reach a consensus on timing."
The Fed meets on Tuesday and Wednesday and, while much of
the market still thinks it will wait until January or March, the
decision on tapering is likely to be a very close call.
YEN BACK ON THE SKIDS
The rise in U.S. bond yields helped the dollar recoup all
the losses suffered on the yen early in the week, while the euro
also made a fresh five-year peak at 142.82 yen. The
single currency was otherwise sidelined on the dollar at $1.3749
Some currencies in Asia have also been losing ground amid
concerns an eventual tapering by the Fed will draw capital away
from their markets.
Indonesia's rupiah hit a near five-year low of 12,058 per
dollar, while the Malaysian ringgit and the
Indian rupee also lost ground.
Another casualty was the Australian dollar, which sank a
U.S. cent to $0.8935 after the head of the country's
central bank reiterated his desire for a lower currency.
Reserve Bank of Australia (RBA) Governor Glenn Stevens
confirmed that he would rather see any further easing in
domestic financial conditions come through a drop in the Aussie,
rather than a cut in interest rates.
The central bank has for months been running a verbal
campaign to get the currency down to support trade-exposed
sectors of the economy.
In commodity markets, the higher U.S. dollar weighed on
gold. It skidded to $1,226.80 an ounce and away from the
week's top at $1,267.26.
Brent oil futures stayed below $109 a barrel on the possible
reopening of major Libyan ports this weekend and expectations
that the Fed may soon start unwinding its stimulus.
After dropping over a buck on Thursday, Brent crude
edged down 7 cents on Friday to $108.60 a barrel. U.S. crude
futures for January delivery were down 8 cents at $97.42