* U.S. dollar weakens, as fears on U.S. fiscal health
simmer
* Oil near $60 on inventory draw down, copper climbs
* Some shift in equities back to defensive sectors
By Kevin Plumberg
HONG KONG, May 13 (Reuters) - The U.S. dollar fell to a
four-month low on Wednesday as optimism about a global recovery
and concerns about U.S. fiscal health reduced its safe haven
appeal, while oil held near $60 a barrel on hopes for more
energy demand as inventories tighten.
Stocks markets in Japan, South Korea and Taiwan gained but
they slipped in Australia and Hong Kong as investors bought
back some defensive sectors after a solid rally in the last few
months left them wondering whether it would last.
Adding to souring sentiment on the U.S. dollar, a
commentary in the Financial Times about the risk of the U.S.
government losing its top credit rating touched a nerve among
traders. []
The latest bout of dollar weakness has coincided with
surging global equity markets as investors large and small
begin to put money back to work that had been locked safely
away in dollar-denominated assets.
"The decline in the U.S. dollar that we have seen over the
past few weeks coupled with rising stock markets seems
reflective of an asset allocation shift out of cash into
equities," Ashley Davies, currency strategist with UBS in
Singapore, said in a note to clients.
Davies added the asset shift could pick up speed if
investors bail out of bonds, worried about upcoming supply, and
scepticism about government projections about cutting budget
deficits.
The ICE Futures U.S. dollar index was down 0.25 percent
<.DXY> after earlier plumbing its lowest level since Jan 9. The
index has fallen 8.1 percent since March 9, when a global stock
market rally started.
The euro <EUR=> rose to its highest point against the
dollar in seven weeks at around $1.3722, before easing to
$1.3680, up 0.3 percent on the day.
U.S. crude for June delivery rose 1.3 percent to $59.59 a
barrel <CLc1> after briefly rising on Tuesday above $60, its
highest level since November 2008.
An unexpectedly big draw down of U.S. inventories last
week, reported by the American Petroleum Institute on Tuesday,
helped buoy bullish sentiment in oil. [] []
Gains in commodity prices in the last few months have not
been as big as equity markets since they have been somewhat
stymied by inventory levels. However, the falling dollar and
some evidence of demand in China have propped them up.
Copper for three-month delivery traded in Shanghai rose 1
percent <SCFc3>, after the three-month copper futures on the
London Metal Exchange rose 0.9 percent overnight <MCU3>.
Technology shares outperformed in Asia after Intel Corp's
chief executive said second-quarter orders had been better than
expected so far, while utilities also gained as investors
shifted some money back to defensive sectors.
"Investors are probably shifting money to defensive stocks
and taking profits in those sensitive to the health of the
global economy such as exporters and financials as they have
recovered sharply," said Masaru Hamasaki, a senior strategist
at Toyota Asset Management in Tokyo.
Japan's Nikkei share average <> edged up 0.1 percent,
helped by a 5.5 percent rise in shares of Nissan Motor Co
<7201.T> after the carmaker forecast a smaller-than-expected
operating loss.
Australia's benchmark index fell 0.8 percent <>, with
mining stocks weighing on the broad market.
Hong Kong's Hang Seng index <> slipped 0.3 percent with
shares of China Construction Bank <0939.HK> one of the biggest
drags on the market for a second day.
An investor on Wednesday sold $460 million worth of the
company's stock at a slight discount, a day after Bank of
America <BAC.N> sold $7.3 billion worth of China Construction
shares to a group of investors at a steep 14 percent discount.
The MSCI index of Asia Pacific shares traded outside Japan
<.MIAPJ0000PUS> rose 0.3 percent, just below a seven-month high
struck on Monday.
(Additional reporting by Aiko Hayashi in TOKYO)
