* Asian shares and currencies calmer after torrid few days
* Tokyo stocks recoup losses, Japan to raise radiation alert
* Markets fear Fed minutes could yet trigger more capital
By Wayne Cole
SYDNEY, Aug 21 Asian shares found a sliver of
support on Wednesday following some punishing falls, but the
reprieve could prove vanishingly short should minutes of the
Federal Reserve's July policy meeting add to suspicions it will
soon pare back on stimulus.
Regional currencies were also calmer as India's rupee
managed to avoid hitting another record low, though both the
Indonesian rupiah and Thai baht extended their declines.
Reports that Japan's government would raise the severity of
the latest leak at Fukushima to a level 3 event, or a serious
radiation incident, sent shivers through stocks there.
But a late bounce saw the Nikkei recoup all its
losses to end 0.2 percent higher. It was perhaps comforted by a
declaration from Bank of Japan Governor Haruhiko Kuroda that he
would not hesitate to expand the bank's massive asset buying
campaign if the economic outlook darkened.
Early indications were that European shares would start
fractionally firmer. Eurostoxx 50 futures were up 0.1
percent and CAC 40 futures 0.2 percent.
Others were not so fortunate. MSCI's index of Asia-Pacific
shares outside Japan eased 0.3 percent having
hit a five-week trough at one stage. Korean shares shed 1
percent while Shanghai lost 0.3 percent.
Emerging markets from India to Brazil have been hard-hit by
the prospect of Fed tapering, which has raised U.S. borrowing
costs and throttled the supply of cheap dollars formerly used to
support domestic demand and fund current account deficits.
While benchmark 10-year Treasury yields edged back to 2.82
percent on Wednesday, analysts are worried the Fed
minutes could jolt them higher again. A break past a major chart
level at 2.90 percent would be especially bearish.
"The minutes should continue to reinforce this theme of
tapering at the September meeting as long as the labour market
holds up," said Michelle Girard, chief U.S. economist at RBS.
"Along with that theme, they should also repeat another tune
dear to FOMC hearts, 'tapering is not tightening.'"
Markets, however, have listened more to the former than the
latter. Indeed, there is a chance the Fed will try to reassure
markets that an actual tightening in policy is still far
distant, perhaps by lowering the level at which unemployment
would warrant consideration of a rate rise.
Unfortunately the Fed itself is divided on all this and the
minutes of its last meeting are likely to show many competing
voices, perhaps leaving the market as confused as ever.
HEADING NORTH FOR THE SUMMER
Still, investors are convinced that the Fed will have to
start tapering at some point and that has made it much harder
for emerging market countries to attract foreign funds.
"Weakness in several key high-yielding emerging markets is
overflowing to the rest," noted analysts at Barclays. "Higher
volatility will benefit countries with better balance sheets and
low currency vulnerability."
As a result they recommend a North-South rotation strategy
-- going long in Korea, China and Singapore, and underweight in
Malaysia, Thailand and Indonesia.
The Indian rupee cratered to a record low of 64.13
per dollar on Tuesday, before steadying at 63.3 on Wednesday.
Indonesia's rupiah was at its lowest since 2009.
Late on Tuesday, India's central bank took steps to support
the beaten-down bond market, a move that did work to bring
yields and market interest rates down sharply.
Among the major currencies, safe-haven flows were tending
to favour the yen and Swiss franc over the U.S. dollar.
Traders also reported much talk that European investors were
repatriating funds from emerging markets, which was one reason
the euro spiked higher across the board.
The common currency was up at $1.3418, having touched
a six-month high of $1.3452 in New York. The dollar also slipped
took a sharp spill on the Swiss franc to 0.9175 but
regained some ground on the yen to 97.55.
Commodities markets were generally softer as the Fed loomed
large. Copper futures dipped 0.4 percent to $7,292.75 a
tonne, while spot gold inched down to $1,366.80, and away
from a two-month high set on Monday.
Brent crude prices eased 53 cents to $109.62 a
barrel, while U.S. oil for October delivery lost 47 cents