* Markets expect new round of central bank action
* Asian stocks jump after U.S. gains, Europe extends rally
* Dollar falls as investors anticipate Fed easing steps
* Gold, tin notch up new records, silver hits 30-year peak
* IMF chief warns against currency as policy weapon
By Alex Richardson
SINGAPORE, Oct 6 (Reuters) - Stocks and metals rose on
Wednesday while the dollar and Japanese bond yields fell after
monetary easing moves by the Bank of Japan spurred expectations
of a new round of central bank action to boost feeble
economies.
European shares extended a rally that began after the BOJ's
move on Tuesday, with the pan-European FTSEurofirst 300
<> up 0.4 percent on early trade and benchmark indexes in
Britain <>, France <> and Germany <> rising 0.5
percent.
The unexpectedly bold action by the BOJ -- which cut
interest rates close to zero and said it would pump cash into
the financial system through asset purchases -- was seen as the
first salvo in a reflationary splurge by policymakers in Japan,
the United States and Britain. []
Global markets are now preoccupied with the likelihood that
the Federal Reserve will make a new sortie into "quantitative
easing" -- effectively printing money to buy assets -- next
month, an expectation that pushed the dollar down broadly.
Chicago Fed President Charles Evans was the latest senior
official to give credence to that view, when he was quoted by
the Wall Street Journal as saying the central bank should do
"much more" to stimulate the sluggish recovery. []
"It's really going to be a struggle between Fed easing and
BOJ easing, and whoever wins that contest is going to dictate
the direction of dollar/yen," said Gareth Berry, a currency
strategist at UBS in Singapore.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Trade weighted exchange rates:
http://r.reuters.com/qun86p
Global interest rates:
http://link.reuters.com/wed86p
BOJ policy rate:
http://link.reuters.com/syz76p
Yen - taking on the market:
http://r.reuters.com/fac44p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The weakening dollar drove traditional safe haven gold to
the latest in a series of record highs and silver to a 30-year
peak, while hopes that monetary stimulus will boost industrial
demand sent tin to a record and copper to its highest level in
more than two years. []
But ultra-low interest rates and monetary easing in the
rich world has ignited fears of "beggar-thy-neighbour" currency
wars, with International Monetary Fund chief Dominique
Strauss-Kahn warning that countries risk undermining the global
recovery if they use their currencies to try and boost domestic
growth.
"There is clearly the idea beginning to circulate that
currencies can be used as a policy weapon," Strauss-Kahn said
in comments published in the Financial Times on Wednesday.
[]
STRONG YEN
The BOJ's decision to buy a broad range of assets,
including real estate investment trusts and exchange traded
funds, lifted the Nikkei share average <> 1.8 percent to a
2-month closing high, although some players remained wary of
the strong yen. []
"The most important focus seems to have been aimed at
currencies but the yen hasn't weakened against the dollar, and
that's keeping a lid on further stock gains," said Mitsushige
Akino, chief fund manager at Ichiyoshi Investment Management
Co.
"Rather, the yen is staying on the strong side due to
expectations that the U.S. Federal Reserve might announce a
larger-scale easing."
Hopes of further stimulus from the Fed pushed U.S. stocks
to a near 5-month high on Tuesday, with the S&P 500 <.SPX> up
2.1 percent, and the exuberance continued in Asia. []
MSCI's broadest index of Asia Pacific shares outside Japan
<.MIAPJ0000PUS> rose 1.6 percent to a 2-year high, led by the
materials and energy sectors <.MIAPJMT00PUS> <.MIAPJEN00PUS>.
"Commodities are all looking pretty fabulous at the moment.
Everyone's happy," said Martin Angel, a dealer at Patersons
Securities in resource-rich Australia, where the benchmark
index <> rose 1.7 percent. []
Spot gold <XAU=> hit a new record at $1,349.80 an ounce and
silver <XAG=> touched a 30-year peak at $23.05 an ounce. London
Metal Exchange three-month copper <CMCU3> rose more than 1
percent to $8,300 a tonne, its highest since July 2008, and tin
<CMSN3> hit a record $26,251 a tonne. [] []
"The second round of the commodity bull-run has already
started. I'm quite positive it will last possibly until 2016,"
said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.
Oil <CLc1> was flat near a 5-month high just below $83 a
barrel. []
The dollar stood at 83.15 yen <JPY=>, well down from its
post-BOJ high of 83.99 and less than half a yen away from its
15-year low of 82.87 yen set in mid-September shortly before
Japan intervened to weaken a currency whose strength was
hammering the export sector on which its economy is built.
It was also teetering above an eight-month low against a
basket of currencies <.DXY>.
The euro was steady at $1.3840 <EUR=>, having hit an
8-month high of $1.3860 on Tuesday helped by buying by Asian
central banks, traders said. []
Benchmark 10-year Japanese Government Bond <2JGBv1> futures
rose 0.48 point to 144.15, climbing above 144.00 for the first
time since June 2003. The benchmark 10-year yield
<JP10YTN=JBTC> slid 7.5 basis points to 0.835 percent, the
lowest in 7 years. []
U.S. Treasuries also rose broadly in Asian trade, with the
5-year yield <US5YT=RR> touching a record low. []
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