* Yen's slide halts just before 100 to dlr
* BOJ action keeps global bond yields near lows
* Benign China inflation data boosts sentiment
* U.S. stocks seen mixed as earnings reports eyed
By Richard Hubbard
LONDON, April 9 A sell-off in the yen ran out of
steam on Tuesday as it neared 100 to the dollar, while a fall in
Chinese inflation and a solid start to the U.S. corporate
earnings season helped shares and commodities.
The Japanese currency reached 99.67 to the dollar before the
sell-off stalled, the greenback's strongest level against the
yen since May 2009. The euro peaked at 129.94 yen, its highest
since January 2010.
Most market players expect yen selling to resume but said it
may have to wait until currency options close to the 100 mark
expire. This should end the current demand from banks to buy the
yen and sell dollars to protect their exposure.
Analysts believe it is only a matter of time before this
happens and the dollar sails past the 100 yen mark.
"It looks inevitable, and I'd say (it will break 100) within
the next month, if not sooner," said Alpesh Patel, a founding
principal at asset manager Praefinium Partners.
The dollar selling on Tuesday left the greenback down 0.4
percent at 98.92 yen, while the euro was also off 0.15
percent on the day at 129.05 yen.
The U.S. currency has still gained around 7 percent against
the yen since the Bank of Japan (BOJ) unveiled a massive
stimulus programme last Thursday involving large purchases of
long-term Japanese government bonds (JGBs).
The BOJ's bold measures have had a major impact on the
world's main debt markets, sending Japanese government yields
down sharply and spurring a search for higher-yielding assets,
which has seen yields fall on U.S. and euro zone bonds.
"Markets are increasingly focused on the notion that larger
JGB purchases, at longer maturities, by the BOJ could push
Japanese domestic long-term investors elsewhere," said Vassili
Serebriakov, strategist at BNP Paribas.
However, yields on highly rated euro zone bonds moved up
from record lows on Tuesday, as investors began to position for
fresh government debt auctions.
Dutch 10-year bond yields were 6 basis points
higher on the day at 1.5 percent, pulling back from last week's
record lows of 1.384 percent, after a sale of new 20-year
German 10-year bond yields were also higher at 1.28 percent,
having hit 1.2 percent on Friday, their lowest
level since mid-2012 before European Central Bank President
Mario Draghi promised to do whatever it took to save the euro.
The yield on 10-year Treasury notes stood at 1.76 percent
, three basis points up on the day, though not far
from a four-month low of 1.68 percent when markets began to
price in the effect of the BOJ's plans.
Equity markets were up on demand for mining stocks as
investors hoped for more accommodative monetary policy from
China following benign inflation data, and after U.S. resources
giant Alcoa posted solid earnings.
Alcoa Inc, the largest U.S. aluminium producer,
kicked off U.S. earnings on Monday, reporting an increase in
quarterly profit and easing some concerns about corporate
results in the first three months of 2013.
Europe's FTSE Eurofirst 300 index was up 0.3
percent at 1,168.6 points by midday, while the London FTSE 100
, Paris's CAC-40 and Frankfurt's DAX
were between 0.3 and 0.4 percent higher.
Earlier, the MSCI's broadest index of Asia-Pacific stocks
outside Japan rose 1 percent, led by Australian
shares, which gained 1.4 percent on rises in blue-chip
financials and miners.
MSCI's world equity index, which tracks
share prices in 45 countries, was up 0.3 percent, though gains
may slow as U.S. stock futures suggest Wall Street will have a
China's annual consumer inflation cooled in March as food
prices eased from nine-month highs and producer price deflation
deepened, data showed on Tuesday, leaving policymakers room to
keep monetary conditions easy and nurture a nascent recovery.
The Chinese data underpinned demand for copper, which
climbed to a two-week high of $7,550 a tonne on the London Metal
Exchange before paring some of the gains to trade around
$7,530 a tonne, up 1 percent.
LME copper prices are recovering from eight-month lows of
$7,331.25 a tonne hit last week but are still down by more than
5 percent from a peak above $8,300 a tonne in early February as
weak global demand leads to a surplus in supply.
Oil also gained on the Chinese data, and a stalemate in
talks between Iran and Western nations over its nuclear
programme and rising tensions on the Korean peninsula also
North Korea has nearly closed its last major project with
its southern neighbour, raising speculation it may test a
nuclear weapon or a missile.
U.S. oil futures were up 0.1 percent at $93.47 a barrel
and Brent rose 0.4 percent to $105.09.