* Nikkei plumbs four-week lows, other Asian markets also
* Yen rises to one-month high vs broadly weaker dollar
* Tentative gains seen for European stocks at open
* Plenty of hurdles this week, not least Fed meeting
By Ian Chua
SYDNEY, July 29 The yen rose to a one-month high
against the dollar on Monday as investors braced for another
round of disappointing economic news out of China, knocking
Japanese stocks to four-week lows and dragging down regional
MSCI's broadest index of Asia-Pacific shares outside Japan
dipped 0.6 percent, giving back a chunk of last
week's 1.9 percent gain.
Tokyo's Nikkei share average slid 3.3 percent to its
lowest close this month, and has now lost more than 7 percent in
Traders said there were concerns that manufacturing surveys
later this week would point to more weakness in China, Asia's
economic powerhouse and a major trading partner for countries
throughout the region.
"A sense of caution is looming in the market, especially
because investors are worried about a slowdown in the Chinese
economy. And when they see a risk in Asia, they tend to buy the
yen, and the Japanese market is hit by that," said Kyoya
Okazawa, head of global equities at BNP Paribas.
Adding to the uncertainty were signs that a planned increase
in the sales tax -- Japan's most significant fiscal reform in
years and seen as a test of government resolve to fix its
finances -- could be delayed or watered down.
"Foreign investors expect Japan to raise its sales tax rate
to 8 percent next April and this has supported the market for
some time now," said Kenichi Hirano, a strategist at Tachibana
"If this plan doesn't go through as expected, it could
result in a huge sell-off in yen and Japanese stocks. Even a
change or a delay in the plan would have negative effects on the
Despite the fall in Asian bourses, financial spreadbetters
are calling for European markets to open slightly higher, partly
supported by hopes the Federal Reserve, European Central Bank
and Bank of England will this week offer reassurances that their
monetary policies will remain accommodative for a long time.
All three central banks hold their respective meetings later
in the week.
The yen strengthened to a one-month high around 97.64 per
dollar, having been weaker than 100 per dollar as
recently as last Thursday, while the euro fell back below 130.00
yen to two-week lows.
Against the dollar, the euro was little changed at $1.3280
, having stalled for a third day just under $1.33. That
helped the dollar index edge off a five-week trough hit
earlier in the day.
Still, expectations that the Fed will maintain its pledge to
keep policy loose even if it is to begin tapering stimulus in
coming months should keep the dollar pinned down, analysts said.
"The Fed is likely to reiterate that while it is considering
tapering its monetary stimulus later this year, it is
conditional on stronger economic growth and that interest rate
hikes are still a long way off," said Shane Oliver, head of
investment strategy at AMP Capital.
Oliver said the Fed might even consider adjusting its policy
guidance to emphasise there will be no imminent tightening.
"The Fed's assessment of recent mixed data will clearly be
watched as a guide to whether the start of tapering will be
delayed beyond the September meeting, which was initially the
consensus favourite as to when it would begin."
Worries about China kept commodities under pressure,
although the soft dollar helped limit their losses.
Copper reached three-week lows around $6,820 a
tonne, while U.S. crude eased 0.5 percent to $104.14 a
barrel, staying within sight of a three-week trough of $103.90
hit on Friday.
Gold was a touch softer following a 3 percent rally
last week. It stood around $1,327 an ounce, off a five-week peak
of $1,347.69 hit last Tuesday.