* Japan, Australia shares slip on profit taking
* Falling U.S. yields calm investor concerns, hurt dollar
* Asian currencies gain on China's move to push yuan higher
By Saikat Chatterjee
HONG KONG, Feb 18 (Reuters) - Asian stocks are set to finish
their best week in two months as investors scooped up bargains
amid signs that heavy selling of the past few weeks was drawing
to a close.
In the currency market, the Swiss franc was the main
beneficiary of safety bids triggered by mounting tension in the
Middle East.
Indonesian and Indian stocks , which have
been pummeled last month saw some bargain buying this week while
Japanese and Australian shares succumbed to a
bout of profit taking after posting solid gains.
The MSCI's index of Asia Pacific shares outside Japan
rose by one percent, extending its weekly gains
to nearly 2.7 percent, its best week since December.
Asian stocks hit a two-month low last Friday. The region's
shares and bonds sold off heavily last month as investors fled
to the relative safety of developed U.S. and Japanese markets
because of inflation concerns, but there were signs that the
sell-off may be drawing to a close.
Asia equity ETF redemptions slowed to just $55 million last
week after averaging $369 million in the previous three weeks
while local buying in India was the biggest since late 2009,
data from Trim Tabs Investment Research showed.
Japan has been the best performing market in Asia so far
this year, having gained some 6 percent, making it ripe for some
profit taking.
"As we enter March when Japanese institutional investors
normally aggressively sell to lock in gains ahead of earnings
announcements and as the Nikkei nears 11,000 mark, some sort of
correction seems inevitable in the mid-term," said Masayuki
Otani, chief market analyst at Securities Japan Inc.
TREASURIES RALLY
Safe haven buying lifted U.S. Treasuries, with the 10-year
benchmark yield falling to 3.60 percent, below a
10-month peak of 3.77 percent marked last week. .
This week's drop has also calmed concerns that a relentless
rise in U.S. yields would narrow the yield differentials with
emerging market bonds and trigger further selling.
Ten-year yields are up by nearly 120 basis points since
October.
Foreigners have resumed buying Indonesian local currency
bonds after heavy selling last month as the central bank's rate
rise offered some reassurance about its inflation fighting
credentials. As a result, net ownership climbed to a new record
and sent the rupiah up to a 3-1/2 year high.
Softer Treasury yields have also weighed on the U.S. dollar.
In the currency markets, the Swiss franc a
safe-haven, climbed to two-week highs versus the dollar and euro
as unrest spread across the Middle East and North Africa.
.
Asian currencies also received a leg up from China's move to
guide the yuan to a record high before this weekend's
G20 meeting. .
U.S. crude futures for March delivery were trading
above the $86 per barrel mark while ICE Brent crude for April
delivery were trading around $103 levels. .
Gold looked set to build on this week's hefty gains
above the 1380 an ounce line.
(Additional reporting by Adrian Bathgate in SYDNEY and Antoni
Slodkowski in TOKYO; Editing by Tomasz
Janowski)
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