* Bernanke reiterates loose US policy
* Tokyo shares dip, Toyota rallies but Denso weighs
* Dollar rebounds; euro hits one-year low against yen
By Vidya Ranganathan
SINGAPORE, Feb 25 (Reuters) - A tepid rally in Asian shares
faltered early on Thursday and the dollar rose after Fed
Chairman Ben Bernanke's reaffirmation of an extended period of
low U.S. rates boosted risk-seeking but also raised some
concerns about global growth.
Japan's Nikkei average rose initially, helped by exporters
such as Canon Inc <7751.T> and as Toyota Motor Corp <7203.T>
<TM.N> reversed most of the losses of the past two days after
its chief apologised to consumers and pledged reforms to
sceptical lawmakers at U.S. Congressional hearings. Toyota's
U.S.-listed shares jumped 3.9 percent. [] []
But a more than 2 percent slide in Denso Corp <6902.T>
weighed on the broader Tokyo market after authorities said the
FBI has raided three Detroit-area Japanese auto parts makers
for a sealed federal antitrust investigation, including Toyota
suppliers Denso and Tokai Rika <6995.T> []
"The market welcomed a rebound in U.S. stocks after news
that the country will continue its low rate policy," said
Yutaka Miura, a senior technical analyst at Mizuho Securities.
"But we've seen a series of worse-than-expected economic
data from America lately and uncertainty about the outlook for
the U.S. economy is increasing."
The MSCI Asia ex-Japan index <.MIAPJ0000PUS> fell 0.43
percent, and sectors that fell the most were industrials and
technology. The Nikkei was down 0.2 percent at 10179.79
A report on U.S. new home sales on Wednesday highlighted
the Fed's predicament. Sales slumped more than 11 percent to a
record low, suggesting the sector at the epicentre of the
financial crisis had yet to fully heal. []
Bernanke's assessment of the economy was also grim, further
curbing the speculation of quicker policy tightening that had
been spurred by last week's raising of the discount rate.
He also said a weak job market and tame inflation warrant
low interest rates for "an extended period", making clear
policy tightening is some time away and boosting the Dow Jones
Industrial average <> by 0.89 percent. []
DOLLAR RECOVERS
The dollar <.DXY> fell initially in Asia but the
trade-weighted index soon recovered to 80.96, reaching for
Monday's highs.
Gold <XAU=> was at $1,096 an ounce, far from Wednesday's
high of 1,107.95 and down 3 percent from Monday's peak above
1,130.
Oil prices <CLc1> also hovered just above the $80 mark but
were also off Wednesday's highs at $80.45, a level hit when
stock markets rallied on the back of Bernanke's remarks despite
a bearish report showing a build up in U.S. crude stockpiles.
The euro <EUR=> stayed weak at $1.3483, paring further the
gains it had made soon after Bernanke's remarks and heading
closer to a nine-month low of $1.3442 struck last week.
Worries about a possible downgrade of Greece weighed on the
European single currency, pushing it down from above $1.36 on
Wednesday.
Standard and Poor's said it may cut Greece's BBB+ rating by
one or two notches within a month, citing downside risks to
growth that could hinder the country's deficit-cutting plans.
[]
"The Greek situation remains fluid. So acrimonious
discussions between Athens and Brussels could easily result in
further near term euro slippage," Citi said in a note.
But Citi also said that with euro net short positions at a
record high, any positive news from Greece in the coming weeks
could lead to a bounce in the single currency.
The euro has lost over 10 percent since late November as
fiscal woes in Greece intensified in the past few months
leading to a huge sell-off by investors.
The currency hit its lowest level in a year against the yen
<EURJPY=R>, hitting 120.62 yen on trading platform EBS, as
hedge funds liquidated positions in yen crosses.
(Additional reporting by Aiko Hayashi in TOKYO, Anirban Nag
in SYDNEY, Kaori Kaneko in Tokyo; Editing by Kazunori Takada)
