* Japan FX intervention pushes yen sharply lower, Nikkei up
* Weak U.S. manufacturing data weighs on stocks
* Treasuries up as traders expect BoJ to buy US debt
(Updates to early afternoon trade)
By Walter Brandimarte
NEW YORK, Sept 15 (Reuters) - The yen tumbled against the
dollar on Wednesday after Japan began selling its currency in
foreign exchange markets, boosting Treasuries prices, while
global economic uncertainties weighed on European stocks.
The Chinese yuan scored its fastest rise against the dollar
in five trading session in more than two years, as U.S.
pressure mounts again over the yuan's value.
Prices of shorter-dated U.S. Treasuries rose as traders
anticipated the Bank of Japan may soon buy U.S. debt to park
dollars coming in from its first currency intervention in more
than six years.
Japanese shares jumped as a weaker currency should benefit
exporters, but weak U.S. manufacturing data weighed on stocks
elsewhere. Concerns about the global economic recovery also
kept gold prices near record highs.
Japan promised to keep intervening in the market to protect
its fragile economic recovery. The yen had recently reached its
highest level in 15 years, threatening the country's exporters.
[]
Traders estimated the Bank of Japan sold around 1.5
trillion yen ($17.67 billion) on Wednesday.
"I think we're now going to see persistent official buying
of dollar/yen in the near-term," said Adam Cole, head of
currency strategy at RBC Capital Markets.
The dollar jumped 3.09 percent to a 85.62 yen <JPY=>, after
having dropped to a 15-year low of 82.87 yen earlier, and was
up 0.5 percent against a basket of major currencies <.DXY>.
Still, the dollar remains about 7.8 percent lower this year
against the yen, which is seen by investors as a safe haven
from concerns over global growth.
"Speculators have been long of yen so there is scope for
further yen selling. But there's skepticism over whether the
Japanese can change the trend as fundamentals haven't altered,"
said Beat Siegenthaler, a foreign exchange strategist at UBS.
Japan's intervention also helped send the euro, Australian
dollar and sterling sharply higher on the day against the
Japanese currency, although traders doubted Tokyo had bought
anything other than dollars.
The euro was up 3.1 percent at 111.21 yen <EURJPY=>.
The Chinese yuan <CNY=CFXS> rose 0.77 percent against the
greenback from its close of 6.7943 on Thursday last week.
Dealers said, however, the yuan's latest rally also
coincided with the dollar index's 1 percent decline in global
markets over the same period. They warned that a pullback in
the yuan's rise could occur as soon as Thursday if the dollar
rebounds globally.
"U.S. pressure may be the key reason for the PBOC to let
the yuan rise recently, but global dollar weakness has also
offered an easy excuse," said a trader at a European bank in
Shanghai.
"If things run out of control, the PBOC could equally make
a global dollar rebound an excuse to pull the yuan back
sharply."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Stories on yen strength, intervention: []
PDF on yen's rise: http://r.reuters.com/zuz33p
Reuters Insider TV-Dlr bounce: http://link.reuters.com/fet63p
Graphic on yen strength: http://r.reuters.com/puw56n
Japan political risk: http://r.reuters.com/jyj83n
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Japan's benchmark Nikkei stock index <> rose 2.3
percent, supported by gains for exporters like Toyota Motor
Corp <7203.T>, which climbed 3.8 percent.
But weak U.S. economic data weighed on world stocks,
keeping the MSCI All-Country World index <.MIWD00000PUS>, lower
by 0.21 percent.
U.S. industrial output decelerated in August while a
measure of New York state business conditions slipped to its
lowest level in more than a year, rekindling fears that the
world's largest economy could be slowing.
"A lot of people are aware we're at the upper end of the
range that we've been stuck in for a while, so you have a
combination of having a nice recent run-up and a little bit of
weak economic data," said Eric Kuby, chief investment officer
at North Star Investment Management Corp in Chicago.
"What you're seeing is some traders saying we're going to
take some profits here ... but what you're seeing is a pretty
muted reaction."
The Dow Jones industrial average <> was up 28.53
points, or 0.27 percent, at 10,555.02, while the Standard &
Poor's 500 Index <.SPX> was nearly stable at 1,121.97. The
Nasdaq Composite Index <> rose 7.75 points, or 0.31
percent, at 2,296.83.
In Europe, the FTSEurofirst 300 <> of top shares
slipped 0.28 percent, pressured by disappointing economic
numbers and a sharp decline in oil prices.
U.S. Treasuries' prices rose as Japan's intervention
spurred bets that the world's No. 3 economy will reinvest their
dollar purchases back into U.S. government debt.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
1/32 in price, with the yield at 2.6736 percent. The 2-year
note <US2YT=RR> was up 1/32, with the yield at 0.4754 percent.
Oil prices fell 1.6 percent to trade below $76 a barrel,
down for the second day, ahead of the U.S. government's weekly
oil inventory report.
(Additional reporting by Charlotte Cooper in Tokyo, Richard
Leong and Leah Schnurr in New York; Editing by Padraic
Cassidy)
