* Tech sector losses weigh on Asia stocks a second day
* Positioning may slow US dollar losses
* Focus on China at G7 may make Japan intervention tough
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, Oct 8 (Reuters) - The U.S. dollar headed for a
fourth week of declines on Friday, supporting gold and emerging
market equities while also reflecting strong convictions before
U.S. job data and contentious international meetings about
currencies.
Major European stocks opened slightly lower, with the
FTSEurofirst 300 <> easing down 0.3 percent.
[]
Bets against the U.S. dollar have grown significantly since
September because of increased expectations the Federal Reserve
will print more money to buy debt. That may limit the downside
if the payrolls number is lower than the unchanged reading that
analysts forecast in a Reuters poll.
Still, if the Fed and perhaps other central banks follow
suit with the Bank of Japan and get more aggressive about
easing policy than markets anticipate, the cheap money trade of
selling dollars and buying gold, emerging market equities and
longer-term bonds will undoubtedly spread.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a preview of U.S. non-farm payrolls, click
http://link.reuters.com/nem47p
For PDF on global currency tensions, click
http://r.reuters.com/dyw27p
For more on the G7/IMF meetings, click
[][]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Japan's Nikkei share average finished 1 percent lower
<> after hitting a two-month intraday high on Thursday.
The yen's persistent strength, even after the Bank of Japan
surprised investors with a rate cut on Tuesday, has frustrated
some into cutting their Japanese equity exposure.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> slipped 0.2 percent after closing at a 28-month
high on Thursday. Declines were spread evenly across most
sectors, though shares in the technology sector fell 1 percent,
underperforming for a second day.
Hong Kong's Hang Seng index rose 0.8 percent <>,
closing in on a two-year high, with real estate developers
outperforming the broad market on expectations the domestic
government at a policy address next week will unlikely erect
harsh rules to cap property prices.
FOLLOW THE FLOW
The falling U.S. dollar has been a boon for emerging market
stocks, which have been a magnet for foreign investment. In
the
week to Oct. 6, emerging market equity funds absorbed more
than $6 billion in new money, the second largest weekly inflow
on record, fund tracker EPFR Global said in a report.
Investor interest has focused on Latin America and Asia.
In the foreign exchange market, the euro <EUR=>, which has
benefited from dollar weakness, was largely unchanged at
$1.3930 after the currency reached an eight-month high around
$1.4030 on Thursday.
The rapid increase of bets on the euro means the threshold
for more dollar weakness after the U.S. payrolls figure is
high.
"Positioning could limit the degree of dollar downside,
particularly against the euro," Todd Elmer, currency strategist
with Citi in Singapore, said in a note.
"This likely means that the bar for a dollar-positive
surprise on the upside is somewhat lower and a just above
consensus outcome may not be a significant spark for
volatility."
The dollar was trading at 82.35 yen <JPY=>, above a 15-year
low of 82.11 yen plumbed on Thursday.
The outcome of the Group of Seven rich nations meeting this
weekend could influence views on when Japanese officials will
intervene again to pull down the yen.
Japan's first intervention in six years last month fed into
a heated debate globally -- what some have even called a
currency war -- about what governments can do to keep their
currencies from strengthening against the falling dollar.
"There's speculation that if the G7 wants a coordinated
stance to put pressure on China to raise the yuan, then it
becomes more difficult for Japan to intervene," said a dealer
at a Japanese brokerage house.
Gold prices were steady at $1,332.75 an ounce in the spot
market <XAU=>. The precious metal traded in a wide range on
Thursday, hitting an all-time high of $1,364.60 but then ending
the session around $1.332.70.
The 90-day inverse correlation between gold and the U.S.
dollar is the strongest it has been all year, meaning when one
falls, the other is very much likely to rise based on price
action over the past three months.
(Additional reporting by Hideyuki Sano in TOKYO; Editing by
Kazunori Takada)
