GLOBAL MARKETS-Dollar slides vs Asia, stocks up ahead of Fed

                                
   * Expectations of further Fed action temper weak jobs report
                                
 * Asia ex-Japan equities up 0.3 pct at 3-month high
                                
 * IMM speculators increase bet against dollar to $15.5 bln
                                
 * US wheat prices down 4.5 pct on profit taking
                                
 By Kevin Plumberg
                                
 HONG KONG, Aug 9 (Reuters) - The U.S. dollar fell against
emerging Asian currencies on Monday on growing expectations the
Federal Reserve will have to buy more bonds to support the
flagging economy, helping to also lift commodity prices and
equities.
                                
 The yen hovered within striking distance of a 15-year high
against the struggling dollar, weighing heavily on shares in
export-dependent Japan and keeping dealers alert for possible
government intervention to weaken the currency.
                                
 Strength in other Asian currencies, though, has also
coincided with equity outperformance. The MSCI Asia Pacific
ex-Japan index rose to a fresh three-month high, a tell-tale
sign that investors are focused on the region's relatively
solid long-term growth prospects and healthier financial
systems.
                                
 Chinese economic data this week are expected to confirm
growth has plateaued for now, though exports and imports will
still probably rise at a double-digit annual pace. [ECONCN]
                                
 The main event of the week will be the Federal Reserve's
decision on monetary policy on Tuesday.
                                
 Speculation has grown that a steady drumbeat of downbeat
economic data, including disappointingly large job losses in
July, will force the Fed to take bolder action to stimulate
growth. [ID:nN06209685]
                                
 "After the poor jobs data, the focus is now on whether the
Fed will further ease its monetary policy. The yen has already
risen to around 85 yen (per dollar) on expectations that the
Fed might do so," said Mitsuo Shimizu, deputy general manager
at Cosmo Securities in Tokyo.
                                
 The U.S. dollar was at 85.38 yen <JPY=>, nearly unchanged
on the day though not far from an eight-month low around 85 yen
reached on Friday in the wake of the weak U.S. employment
report. A dollar decline below 84.81 yen would mark the
strongest      level for the yen in 15 years.
                                
 Against the South Korean won, the dollar fell 0.3 percent
to 1,157.50 won, a near three-month low. A lack of any
chart-based obstacles for the won could push it closer to 1,000
per dollar.
                                
 Persistent dollar weakness is all the more striking given
how quickly short-term investors have amassed a collective bet
against the currency. Speculators on the International Monetary
Market in Chicago in the week ended Aug. 3 had a net short
dollar position of $15.5 billion, the largest since December
2009. [ID:nN06123955]
                                
 Usually such a big position is vulnerable to reversals.
                                
 Japan's Nikkei share average fell 1 percent <.N225> as
investors focused on the negative impact of a stronger yen on
exporters. Electronics components maker Kyocera Corp stock
<6971.T> fell 1.9 percent and was the biggest drag on the
index.
                                
 Outside of Japan, Asian stocks fared better. The MSCI index
of Asia Pacific ex-Japan equities was up 0.3 percent
<.MIAPJ0000PUS> to the highest since May 4.
                                
 Since June, the index has risen 12 percent, exceeding an 8
percent gain on the all-country world index <.MIWD00000PUS> and
a 5 percent rise in the U.S. S&P 500 index <.SPX>.
                                
 ASIAN INFLOWS
                                
 As an example of investors' clear preference for developing
Asian markets, India's stock market -- whose market
capitalisation is a third of Japan's -- has absorbed $11
billion in net foreign investment so far this year, compared
with $10.3 billion in Japan, Standard Chartered data showed.
                                
 Government bond prices ticked higher after a rally in U.S.
Treasuries on Friday as speculation that the Fed will buy debt
to pull down market rates knocked the 10-year yield to a
15-month low.
                                
 Ten-year Japanese government bond futures were up 0.3
points <2JGBv1>, getting closer to a 7-year high hit last week.
In the cash market, the 10-year yield fell 3.0 basis points to
1.025 percent <JP10YTN=JBTC>, moving closer to a seven-year
trough of 0.995 percent touched last week.
                                
 "Depending on what the Fed does at the meeting the 10-year
yield could try for 0.95 percent. The 1 percent threshold is
seen as less of a barrier now that it has been breached once,"
said Katsutoshi Inadome, a fixed-income strategist at
Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
                                
 U.S. Treasury futures were flat on the day <TYc1>.
                                
 Commodities prices got a boost from the weaker dollar. U.S.
crude for September delivery rose 0.4 percent to $81.01 a
barrel <CLc1>, having risen 11.6 percent since June.
                                
 However, U.S. wheat prices fell 4.5 percent <Wc1>, adding
to a 7 percent decline on Friday. Chicago wheat futures surged
to a two-year high after Russia banned exports of the grain
last Thursday, though prices come tumbling back on profit
taking. [ID:nSGE67800B]
 (Additional reporting by Aiko Hayashi and Shinichi Saoshiro in
TOKYO)
 (Editing by Kim Coghill)