* Asian shares track gains in Wall Street
* Concerns about Beijing's tough credit stance weigh
* Dollar off 3-year high on profit-taking, uptrend seen
By Hideyuki Sano
TOKYO, July 9 Asian shares rose on Tuesday,
tracking a rally on Wall Street spurred by strong U.S. job data
last week, though gains were capped by investors' nervousness
over Beijing's drive to reform credit and the implications of
tighter U.S. monetary policy.
The U.S. dollar clung near a three-year high against a
basket of currencies despite profit-taking after its strong
rally sparked by strong U.S. employment data last Friday.
"Investors are moving more cautiously ahead of the earnings
season. The market is also still in the process of gauging
whether strength in the U.S. job data last week was a good thing
or a bad thing," said Chung Seung-jae, a market analyst at Mirae
"Investors are still unsure whether signs of economic
improvement in the U.S. is better for the market than the
premature reduction of Fed stimulus," Chung added.
Japan's Nikkei share average rose 1.3 percent,
edging close to the six-week high hit on Monday, while MSCI's
Asia-Pacific ex-Japan index rose 0.8 percent.
Chinese shares were softer, however, with the CSI300
of the leading Shanghai and Shenzhen A-share listings
dipping 0.4 percent after a 2.8 percent fall the previous day.
China shares had their worst day in two weeks on Monday,
after China's leadership laid out plans to ensure banks would
support an economic rebalancing to more efficient, high-end
manufacturing from ageing industries facing overcapacity and
extravagant investment funded by cheap debt.
Data showed on Tuesday China's annual consumer inflation
accelerated more than expected in June as food costs soared,
limiting any near-term room for the People's Bank of China to
loosen policy to underpin the slowing economy.
Beijing will release trade data on Wednesday and
second-quarter GDP numbers on Monday.
TUG OF WAR
Asian shares have been hit by a double whammy of worries
over a slowdown in China and tighter U.S. monetary policy.
"It is emerging market shares, rather than U.S. shares,
that have taken the brunt of a likely reduction in the Fed's
asset purchases. If U.S. bond yields are higher, investors do
not need to go to emerging market for yields," said Ayako Sera,
senior market economist at Sumitomo Mitsui Trust Bank.
"We are going to see a tug of war between strong U.S. shares
and softer emerging economy shares. The ultimate question is
whether tighter U.S. policy will damage emerging economies to
the extent that it will hurt global growth," she added.
Wall Street shares extended their bull run on Monday, with
Standard & Poor's 500 Index gaining 0.53 percent to
1,640.46, with market focus shifting to upcoming earnings.
After the market's close, Dow component Alcoa Inc,
the largest U.S. aluminium producer, reported a
larger-than-expected quarterly profit, excluding one-time items
such as restructuring costs and legal expenses, kicking off the
Its stock slipped 0.2 percent after hours, after having
risen 1.4 percent in the regular session.
The dollar index, which measures the value of the
greenback versus a basket of six major currencies, stood flat at
84.305, not far from Monday's high of 84.588, its strongest
since July 2010.
"On the whole, the dollar is likely to gain further and U.S.
yields are likely to rise given the Fed's policy outlook," said
Sumitomo Mitsui Trust's Sera.
Expectations that a stronger U.S. economy will give the Fed
room to begin tapering its bond-buying, most likely in
September, have sparked a nearly 5 percent rally in the dollar
since mid-June and sharp rise in U.S. bond yields.
The 10-year U.S. notes yield had risen as high as 2.755
percent on Monday, though bargain-hunting pushed it back to
Investors will be looking for more clues on the Fed's plans
in a speech by Chairman Ben Bernanke on Wednesday.
Oil futures dipped, slipping from their
Monday's multi-month high as the announced returns of a Libyan
oilfield and an Iraqi pipeline eased concerns about global oil
supplies sparked by unrest in Egypt.
Gold extended a rebound to a second day after breaking
through a key technical level and as China inflation data
boosted its appeal as a hedge against rising prices in the
world's second-biggest buyer of the metal.
Spot gold XAU= rose 1.2 percent to $1,250.86 an ounce by