* Dollar at 85.40 yen, still not far from overnight highs
* No evidence of Japanese intervention in FX market
* Asia stocks fall from 5-mth high on profit taking
* Japan exporter stocks outperform
* China yuan mid-point at new high for 5th day
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, Sept 16 (Reuters) - The yen rebounded on
Thursday despite the prospect of new Japanese sales of its
currency, while Asian stocks slipped from a near five-month
high, weighed by softening commodity prices.
Leading European stocks <> were little changed in
early trade.
Japan's solo intervention to weaken the yen on Wednesday
arrived sooner and was more aggressive than many market
participants had expected, making investors suspect officials
in other Asian economies may keep their currencies weak and
policymakers more sensitive about exchange rates.
[]
All eyes were on the U.S. dollar dripping lower against the
yen. Japan did not appear to step in to currency markets during
Asian trading hours on Thursday, leaving what one trader called
a "deafening silence".
For a yen PDF, click: http://r.reuters.com/zuz33p
"After Japan joined the club of Asian central banks by
intervening in the FX market, investors will now look to
determine how successful the policy will turn out to be," Mitul
Kotecha, global head of foreign strategy at Credit Agricole CIB
in Hong Kong, said in a note.
"In the near term there will be wariness of further
intervention to push the yen weaker, which will also keep other
Asian currencies on the back foot."
Asia's currencies are a major focus among investors
globally, especially with the Chinese government setting the
yuan's mid-point <CNY=SAEC> for its trading range at a
post-revaluation high for the fifth day in a row.
Beijing is under fire from Washington, where lawmakers
frustrated with the slow rise of the yuan have threatened to
take action against China.
U.S. Treasury Secretary Timothy Geithner will tell
policymakers later in the day that he is looking for ways to
get Beijing to move faster on the yuan, his prepared remarks to
Congress showed. []
JAPAN'S RESOLVE
The U.S. dollar was down 0.4 percent at 85.45 yen, not too
far from Wednesday's high of around 85.75 yen <JPY=>. Dealers
on Thursday may further test Japan's resolve to keep the yen
weak, though portfolio managers with a longer time horizon
could hold off on closing out of bets on yen weakness.
"Institutional investors have started to close their
yen-short/dollar-long positions since mid-August, which I think
has helped to accelerate the yen's rise. Intervention could
make those investors think twice about closing their
positions," said Kimihiko Tomita, the head of forex at State
Street Global Markets in Tokyo.
Japan's Nikkei share average <> ended down 0.1 percent
after earlier climbing to the highest since August 10. Large
and liquid exporter stocks did well, with both Toyota Motor
Corp <7203.T> and Sony <6758.T> up 1.7 percent.
Expectations that Japan is determined to make its yen
selling policy effective made Japanese exporter stocks
outperform most of Asia.
Despite the Nikkei's stand-out equity gains this week,
Japan has significantly underperformed other advanced stock
markets in the current quarter. U.S. and European stocks are up
some 9 percent while Japan has eked out a gain of 1.3 percent.
The MSCI index of Asia Pacific stocks outside Japan fell 1
percent <.MIAPJ0000PUS>, weighed the most by profit taking in
the materials sector and weakness in financials.
Commodity-related stocks have been outperforming the MSCI
index, climbing 20 percent since June, compared with the
index's returns of 16 percent.
Mainland Chinese shares were the biggest decliners in the
region, with the Shanghai composite index <> falling 2
percent on fears regulators will increase capital requirements
of banks. Continued yuan strength, which can be painful for
exporters, and profit taking ahead of holidays were also
factors.
Investors will be looking to reports on new U.S. jobless
claims, producer prices and a regional manufacturing report
later in the day. Recent data has suggested the U.S. economy is
stuck in a soft patch but do not suggest a new recession is
brewing, as some analysts had feared.
Investors took advantage of the overnight rise in the
late-maturity U.S. Treasury yields and bought the bonds back.
The 10-year U.S. Treasury yield <US10YT=RR> slipped a basis
point from late Wednesday in New York to 2.71 percent.
Japan's yen selling had weighed on long-maturity U.S.
yields on Wednesday in anticipation that the purchased dollars
would presumably be recycled into short-maturity Treasuries.
The spread of 10-year Treasury yields over Japanese bond
yields widened to the most in almost a month, offering another
reason for dealers to get behind dollar strength against the
yen.
Gold was nearly unchanged at $1,266.25 an ounce <XAU=>
after hitting a record high of $1,274.75 on Tuesday.
Billionaire investor George Soros said gold was the "ultimate
bubble", though prices could continue to rise in the meantime.
[]
U.S. crude fell for a third straight day, down 0.8 percent
to $75.39 a barrel <CLc1>, after Enbridge said U.S. regulators
have agreed to a Friday restart of the company's biggest
pipeline from Canada, restoring crude supplies to Midwest
refiners.
(Additional reporting by Hideyuki Sano in TOKYO)
