* Yen within sight of record high of 79.75 per dollar
* Yen outperforms vs higher-yielders as equities fall
* U.S. GDP due but main focus on FOMC, likely QE
(Adds quote, detail)
By Neal Armstrong
LONDON, Oct 29 (Reuters) - The yen rose to within sight of
its 1995 record high versus the dollar on Friday, rising broadly
as equity markets fell, pushing down the euro and high yielders
in trade made choppy by month-end flows.
A pullback in riskier assets, triggered by soft Japanese
data, knocked the dollar towards a 15-year low of 80.41 yen,
within sight of a record trough of 79.75 also set in 1995.
Soft Japanese manufacturing data [] prompted a
1.75 percent fall in the Nikkei average <>, which had a
knock-on effect on global equities.
"The yen is outperforming on risk-aversion following the
Japanese data," said Manuel Oliveri, currency strategist at UBS
in Zurich.
"The slowdown in manufacturing activity is mainly due to
slowing export growth on the back of a stronger yen."
A falling share market was seen testing Japanese
authorities' resolve on intervention, after they did so in
September to counter a push higher in the yen. []
European stocks were down 0.4 percent <> and U.S.
equities looked set for a negative open. <.SPc1>
The dollar was down 0.2 percent at 80.80 yen <JPY=>, off an
earlier low of 80.53 on trading platform EBS, with stop-losses
reported under 80.40 ahead of a layer of bids from 80.30 to
80.00.
Traders said a Japanese house was a large buyer in the
European session, with estimates of up to one billion dollars
going through, but there was limited impact on the price.
The euro <EURJPY=R> fell 1 percent to 111.65 yen, while the
Australian dollar fell 1.2 percent to 78.24 yen <AUDJPY=R> and 1
percent against the U.S. dollar <AUD=D4> to $0.9678.
Some mild dollar selling was anticipated at the European
month-end fixings thanks to outperformance in U.S. equities this
month.
"The large increase in U.S. equity market capitalisations
has led to a sell USD signal for all crosses," said analysts at
Barclays in a note to clients.
IT'S STILL THE FED
Investors are waiting to see if the Fed says next week that
it will resume quantitative easing as many expect, and if so, on
what scale.
A New York Fed survey of dealers and investors included
scenarios of up to $1 trillion, a figure larger than recent
estimates, and analysts say possible scenarios include the Fed
starting at $80 billion to $100 billion a month but leaving
itself the option to do more. []
"We think $500 billion over six months but they may not put
a timeframe to it," said Robert Ryan, FX strategist at BNP
Paribas in Singapore.
Due at 1230 GMT, the GDP report is expected to show the
world's biggest economy grew 2.0 percent in the third quarter.
"U.S. GDP is highly unlikely to be a game-changer unless it
deviates significantly from forecasts which could cause
investors to alter their estimates of QE from the Fed," said
Paul Mackel, director of currency strategy at HSBC.
The euro slipped 0.9 percent to $1.3811 <EUR=>. The dollar
index <.DXY> rose 0.5 percent to 77.659 after falling 1.1
percent the previous day.
"There is some dollar position squaring going on related to
the FOMC with some of our clients starting to feel that the Fed
may disappoint market expectations," said Oliveri at UBS.
(Additional reporting by Masayuki Kitano and Charlotte
Cooper in Tokyo, editing by John Stonestreet and Andy Bruce)
