* Dollar trades near 85 yen on softer U.S. yields
* European stocks up slightly but sentiment poor
* Wary investors eye U.S. construction, PPI data
By Anirban Nag
LONDON, Aug 17 (Reuters) - The dollar hovered near a 15-year
low against the yen on Tuesday, as prospects of more weak
economic data from the United States added to worries about a
global slowdown and capped gains in stock markets.
European shares followed most Asian stock markets slightly
higher, although analysts said gains could prove to be fleeting
given weak sentiment.
Markets also paused ahead of a debt auction by Ireland later
in the day as yield spreads for peripheral euro zone economies
remained under pressure, though Spain sold 12- and 18-month
T-bills at reduced yields compared with last month.
[] []
"We wouldn't expect markets to make too much headway
dramatically in either direction," said Graham Secker, European
equity strategist at Morgan Stanley. "We're in a holding pattern
until we get a breakout in the economic data."
The dollar steadied at 85.24 yen, having slid as low as
85.11 <JPY=> earlier on Tuesday -- within sight of a 15-year low
of 84.72 yen reached last week as investors focused on whether
Japanese authorities will take fresh measures to curb the yen's
strength and boost a flagging domestic recovery.
Traders said it is only matter of time before the greenback
falls past 85.00 yen and threatens to test last week's milestone
due to a general bearishness towards the dollar.
The U.S. government will release reports on producer prices
and housing starts for July later on Tuesday while the Federal
Reserve's data on industrial production for the same month is
also due. Weaker than expected numbers could push the U.S.
dollar and yields on U.S. Treasuries lower still.
On Monday, data showed U.S. homebuilders' optimism hit a
near 1-1/2 year low in August and a regional manufacturing gauge
grew more slowly than expected. These numbers came after Japan
reported growth slowing to a crawl in the second quarter,
bolstering safe-haven flows. [].
GOLD AND METALS GAIN
Reflecting concerns of a slowing U.S. recovery from the
longest and deepest recession since the 1930, investors
consolidated positions in safe-haven assets like core government
bonds and gold while staying wary about adding to risky trades.
"While the weak U.S. data is raising questions about the
sustainability of the pace of the U.S. recovery, we believe the
bigger risk is that the weakness being seen in the major
economies globally will have a negative impact on investor
sentiment," strategists at BNP Paribas said in a note.
The Thomson Reuters global stock index <.TRXFLDGLPU> was
0.27 percent higher at 122.74 while the FTSEurofirst 300
<> index of top European shares was up 0.2 percent at
1,048.62 points. Miners led the gainers as metals prices rose,
on the back of a weaker dollar.
Copper prices rose with many investors awaiting the release
of industrial production data from the United States for a steer
on demand prospects.
Three-month copper <CMCU3> on the London Metal Exchange was
at $7,311 a tonne in morning trade, compared with $7,250 at
Monday's close. Aluminium <CMAL3> was also higher.
Crude bounced from one-month lows but concerns remained that
demand could take a beating following disappointing data from
the United States and Japan, the world's largest and
third-largest oil consumers.
U.S. crude for September delivery <CLc1> was up 0.5 percent
to $75.64 a barrel at 0032 GMT, while October ICE Brent <LCOc1>
gained 35 cents to $75.98.
Gold gained, holding near its strongest level in more than a
month struck the previous day. Traders expect spot gold <XAU=>
to revisit Monday's peak of $1,227.15 an ounce -- the highest
since July 1 -- over coming days.
U.S. Treasury debt prices eased, with benchmark yields
staying around 17-month lows with investors awaiting more
economic data for more clues on the health of the economy.
[].
(Additional reporting by Brian Gorman in London)
(Editing by John Stonestreet)
