* Yen falls after PM resigns, euro steady
* World stocks ease, extending May's nearly 10 pct drops
By Dominic Lau
LONDON, June 2 (Reuters) - The yen fell on Wednesday,
unsettled by the Japanese prime minister's resignation, while
world equities and commodity prices slipped on concerns about
the impact of the euro zone debt crisis on global growth.
The euro steadied, helped by comments from some of the
world's biggest central banks that they would not stop investing
in the single currency. It was little affected by a report on
state-owned Iranian TV that Iran would sell 45 billion euros of
reserves to buy dollars and gold. []
But there were still signs of tension in euro zone assets.
The premium investors demand to buy peripheral government bonds
rather than euro zone benchmark Bunds rose.
The U.S. currency rose to a two-week high of 91.97 yen
<JPY=>, according to Reuters data, as investors sold due to
fears over political instability and the fact that Yukio
Hatoyama's expected replacement, Finance Minister Naoto Kan, has
previously advocated a weak yen.
Kan surprised markets earlier this year by saying he wanted
the yen to weaken more and that most businesses were in favour
of a dollar/yen rate around 95 yen. Since then he has mostly
toed the ministry line that stable currencies are desirable and
markets should set foreign exchange levels.
"If the position does fall to Kan, then the bias will be
towards a slightly weaker yen," said Gavin Friend, currency
strategist at nabCapital.
The resignation news had also weighed on Tokyo's shares,
with the Nikkei average <> down 1.1 percent.
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> slipped 0.6 percent, on the back of weaker
markets in Asia and Europe. The index fell nearly 10 percent
last month, its worst monthly loss since February 2009.
In Europe, the FTSEurofirst 300 <> index lost 0.6
percent, with oil major BP <BP.L> falling 1.9 percent to extend
the previous session's 13 percent slump.
The U.S. government has launched a widely expected criminal
and civil investigation into BP's massive oil spill, ratcheting
up pressure on the beleaguered British oil company.
EURO STEADY
The euro <EUR=> steadied at $1.2226 after rising to around
$1.2249 after official sources in Brazil, India, Japan, Russia
and South Korea said that there were no alternatives to the
dollar and the euro as reserve currencies in the near term.
[]
The euro is down more than 14 percent against the dollar
this year on fears stemming from Greece's sovereign debt problem
and possible contagion risks which sparked a sell-off in
financial markets around the world.
The weakness in the single currency has raised concerns
whether central banks around the world, especially those surplus
rich countries, will trim their holdings of the euro.
However, the Italian/German 10-year bond yield spread
widened to 158 basis points (bps) versus 151 bps at Tuesday's
settlement close. The equivalent Spanish spread was around 6 bps
wider on the day at 175 bps.
"There's still lingering concerns about the fiscal positions
of some countries given the Spanish downgrade on Friday," said
Nick Stamenkovic, strategist at RIA capital markets.
Yields on benchmark 10-year Bunds <EU10YT=RR> fell 3 bps to
2.653 percent, while those on 10-year Treasuries <US10YT=RR>
rose 2 bps to 3.2848 percent.
In the commodity market, crude prices <CLc1> dipped 0.5
percent to trade above $72 a barrel, and copper prices <MCU3>
eased 1.7 percent.
(Additional reporting by Jessica Mortimer, Naomi Tajitsu and
William James)
(Editing by Jason Webb)
