* Yen falls as BOJ calls special meeting, later pares
losses
* Asian shares edge up as Dubai global contagion fears
fade
* Aussie dlr gains then retreats after c.bank raises rates
* European stocks set to open slightly higher
By Susan Fenton
HONG KONG, Dec 1 (Reuters) - The yen tumbled on Tuesday
after the Bank of Japan called an emergency policy review to
discuss ways to boost the ailing economy, but it regained some
ground after the meeting when the central bank did not go as
far as some investors had expected.
Shares in Asia firmed as fears about a global contagion
from Dubai's debt problems faded, while European stocks were
expected to open slightly higher.
Dubai's main share index <>, however, slumped 6.3
percent in early trade, skidding for a second day despite
efforts by Dubai World, the company at the heart of the debt
crisis, to restructure about $26 billion in debt. []
The yen <JPY=> drew early selling as the Bank of Japan
announced a special policy meeting, fueling expectations it
would return to quantitative easing -- effectively flooding the
system with cash -- to spur growth and help tackle deflation.
The Nikkei <> rallied 2.4 percent on hopes for more
growth boosting measures, while Japanese government bonds
<2JGBv1> soared on expectations that the BOJ may buy more of
the debt as part of further monetary easing steps.
Moves announced by the central bank after the meeting,
however, appeared far more modest. The BOJ said it would
introduce a new operation to provide funds for three months at
a fixed interest rate of 0.1 percent, in a bid to enhance
monetary easing by trying to bring down longer-term rates.
[]
The dollar rose more than 1 percent against the yen <JPY=>
to 87.49 yen after reports that an emergency meeting had been
called, but pared gains to 86.80 yen after the BOJ
announcement, still up about 0.4 percent on the day. JGB
futures <1JGBv1> also trimmed early gains.
"It is a bit disappointing for the markets especially when
they could have done much more ... such as increasing
quantitative easing or raising JGB buybacks. The market was
looking for more, and that is one reason why dollar/yen has
dropped so sharply after the move," said Mitul Kotecha, global
head of foreign exchange strategy at Calyon in Hong Kong.
"In the short term it doesn't do anything for the markets
and we have to wait to see the concrete outline of the
government's stimulus packages. They have a problem of
deflation and a rising exchange rate, and this is not going to
solve either of them."
Japanese officials have sounded increasingly worried about
the yen's strength, which will hurt exporters and potentially
derail the country's economic recovery.
In contrast, the Aussie dollar <AUD=> quickly gave up gains
in reaction to the Reserve Bank of Australia's decision to
raise interest rates by 25 basis points to 3.75 percent and
fell back amid uncertainty about the timing of the next rate
rise.
"The (central bank) statement didn't suggest any urgency,"
said Robert Rennie, a currency strategist at Westpac in
Australia.
Shares in Australia <> rose 0.4 percent after the rate
increase, the third in as many months. The central bank said
adjustments in monetary policy would help sustain economic
growth.
QANTAS JUMPS
Most Asian stock markets saw modest gains as fears about
global fallout from Dubai's debt woes continued to ease, and as
tech stocks were boosted by analysts' forecasts for rising
demand for PCs and flat-screen TVs next year.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> rose 0.9 percent, while the Thomson Reuters
index of regional shares <.TRXFLDAXPU> was flat.
"Dubai is still a risk but most of Asia has very limited
exposure to Dubai other than isolated banks. So people may want
to avoid the banks but most other companies are okay," said
Francis Cheung, an equities strategist at CLSA in Hong Kong.
Singapore's DBS Group <DBSM.SI>, Southeast Asia's top
lender, said it had $1.28 billion exposure to Dubai but its
shares were flat by early afternoon.
U.S. Treasuries were steady in Asia ahead of the Institute
of Supply Management index for November and pending home sales,
both due out of the United States at 1500 GMT.
Economic data out of Asia, including China purchasing
managers' indexes [][] and a near 20
percent rebound in South Korean exports last month
[] indicated a regional recovery continued to gain
momentum, but the optimistic news has already been largely
factored into share prices.
Shares in Australian carrier Qantas <QAN.AX>, however,
jumped 3.9 percent after the airline announced a 7 percent rise
in October passenger numbers.
Oil prices <CLc1> were flat at around $77.20 a barrel after
climbing 1.6 percent on Monday on news that Iran had
restructured its naval forces for operations in the event of a
conflict and had detained five Britons after their yacht
strayed into Iranian waters. [][]
Gold <XAU=> dipped to $1,178.20 an ounce, from a New York
close of $1,179.10, but analysts said its uptrend was intact as
its appeal as a safe haven was likely to persist and as central
banks continued to show interest in increasing their holdings.
(Additional reporting by Koh Gui Qing in SYDNEY and Satomi
Noguchi in TOKYO; Editing by Kim Coghill)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)
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