* Dlr up as Geithner suggests currencies roughly in
alignment
* Stocks ease but weaker yen limits Nikkei's losses
* China GDP data shows Q3 growth ebbed but still strong
By Sugita Katyal
SINGAPORE, Oct 21 (Reuters) - The dollar jumped on Thursday
after U.S. Treasury Secretary Tim Geithner suggested major
currencies were roughly in alignment, while stocks fell as
investors digested data showing China's growth ebbed in the
third quarter even as inflation edged higher.
In an interview published in the Wall Street Journal on
Thursday, Geithner suggested that he saw no need for the dollar
to sink further against the euro and the yen, causing the
dollar to spike half a yen and climb rapidly against the euro.
[]
The dollar rose as far as 81.84 yen <JPY=> from about 81.00
yen before Geithner's comments came out while the euro <EUR=>
fell 0.6 percent in a matter of minutes as the market, taking
the comments to imply that the dollar did not need to fall
further, covered dollar short positions.
By late morning, however, it pared some of its early gains,
and the dollar index <.DXY> against a basket of major
currencies was up 0.2 percent.
The drop in the yen, which is still near 15-year highs
against the U.S. currency, briefly pulled Japan's benchmark
Nikkei <> out of negative territory before slipping back
0.3 percent.
"The Nikkei rebounded strongly after the dollar jumped
against the yen on Geithner's comments," said Takashi Ohba,
senior strategist at Okasan Securities.
"This could have prompted active short-covering by foreign
players who were detected selling Nikkei futures heavily the
previous day."
The MSCI index of Asia shares outside of Japan
<MIAPJ0000PUS> also weakened slightly, shrugging off overnight
gains on Wall Street as traders took profits after a strong
run-up in September and early October.
Talk of competitive currency depreciation has flared ahead
of a G20 finance ministers meeting this week and a G20 summit
next month, as developed countries keep monetary policy
extremely easy to shore up sluggish growth and as capital flows
in search of better yields push up currencies in faster growing
emerging economies.
"It's become a bit difficult to test the dollar's downside
for now," said Katsunori Kitakura, chief dealer at Chuo Mitsui
Trust Bank.
"It seems as if the G7 has formed a united front ahead of
the G20 meeting, as he's saying he's mainly focusing on
emerging economies when it comes to currencies."
CHINA GROWTH COOLS A BIT BUT STILL ROBUST
The Shanghai stock market <> briefly turned positive
after data showed China's economic growth ebbed in the third
quarter and inflation edged just a touch higher. But Shanghai
quickly surrendered the gains and was down 1.3 percent by
midday, helping pull Hong Kong shares <> lower.
[]
The Chinese data was broadly in line with forecasts,
suggesting that a surprise interest rate rise from this week
may be enough for now, but markets remain wary of further
policy tightening by the central bank.
Economic growth slowed to 9.6 percent in the third quarter
from a year earlier, down from 10.3 percent in the second
quarter. Analysts had expected a 9.5 percent pace.
Inflation rose in September to 3.6 percent, reaching a
23-month high and smack in line with forecasts.
The Australian dollar <AUD=>, which is sensitive to Chinese
demand due to Beijing's strong demand for raw materials, ticked
up slightly, supported by the view that the economy was
performing as expected and did not appear in danger of either
overheating or a hard landing.
Oil <CLc1> swayed from gains to losses, trading in a range
of $82 to $83, as the dollar strengthened.
(Editing by Kim Coghill)
