* FOMC minutes watched for more clues on size, timing of QE
* World equities, commodities fall
* Dollar near 15-yr low vs yen, up against other currencies
By Dominic Lau
LONDON, Oct 12 (Reuters) - World stocks and commodity prices
fell on Tuesday before Federal Reserve minutes that should give
clues on the timing and size of more U.S. stimulus, while the
dollar hovered near a 15-year low against the yen.
The Fed's comments at its Sep. 21 meeting that it stood
ready to provide more support for the economy have boosted stock
markets worldwide and commodity prices, especially gold which is
seen as hedge against long-term inflation, on expectations of
another round of money printing.
The dollar was sold sharply as market players factored in
the prospect of more quantitative easing, though the U.S.
currency remains weak against the yen, which tends to benefit
from global growth concerns.
However, pending details of the Fed's last meeting from the
minutes, expectations in some quarters are now being pared back,
particularly after Janet Yellen said in her first speech as vice
chair of the Fed late on Monday that low interest rates could
contribute to financial bubbles even if they were not a primary
culprit. []
"The market is moving to pare back expectations of QE by the
Fed," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi.
"The Fed minutes will be crucial as we could learn more
about the size of potential asset purchases."
A Reuters poll of U.S. primary dealers conducted last week
forecast the size of the new round quantitative easing at
between $500 billion and $1.5 trillion. []
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> fell 0.7 percent, though the Thomson Reuters
global equity index <.TRXFLDGLPU> was flat.
U.S. stock index futures <SPc1> <DJc1> <NDc1> dropped 0.7 to
0.8 percent, indicating a weaker start for Wall Street, while
Europe's FTSEurofirst 300 <> eased 0.8 percent.
Japan's Nikkei average <> fell 2.1 percent, dragged
lower by a climb in the yen to 15-year highs against the dollar,
with investors nervous to see whether authorities will intervene
in the currency markets.
The dollar eased 0.1 percent to 82.04 yen <JPY=>, though the
greenback was up 0.4 percent against a basket of currencies.
<.DXY>
The euro <EUR=> was down 0.4 percent at $1.38.19.
Countries from Latin America to Asia have complained that
the Fed's push toward renewed monetary easing is strengthening
their currencies unduly against the dollar, hurting their
competitiveness.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic on futures positioning
http://r.reuters.com/kus26k
For a graphic on trade weighted currency moves since 2007
http://r.reuters.com/qun86p
For a graphic on currency tensions
http://r.reuters.com/jec96p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
COMMODITIES WEAKER
Gold <XAU=> lost 0.6 percent after last week hitting a
record high of $1,364.60 per ounce, and copper <MCU3> slipped
0.2 percent, while oil <CLc1> fell 1 percent.
"The minutes will be important in setting the scene. We'll
see whether the tone is about downside risk," said Bill Dinning,
head of strategy at Aegon Asset Management in Edinburgh. "But
three weeks (the time until the next Fed meeting) in these
markets is an eternity. And clearly there is a debate going on."
However, global demand for raw materials remained anaemic.
POSCO <005490.KS>, the world's No. 3 steelmaker, reported a
weaker-than-expected 9 percent rise in quarterly profit and cut
2010 profit forecast by 7 percent. []
Investor interest shifted to government bonds, pushing down
yield premiums on benchmark 10-year U.S. Treasuries <US10YT=RR>
4 basis points at 2.353 percent to their lowest level since
January 2009, and those on 10-year German Bunds <DE10YT=RR> by 5
basis points to 2.223 percent.
(Additional reporting by Tamawa Desai, Brian Gorman and George
Matlock; Graphics by Scott Barber; Editing by Ruth Pitchford)
