* MSCI Asia ex-Japan pause a day after hitting 3-month high
* Nikkei dips 1.5 percent as firmer yen hurts exporters
* Japan watches as dollar hits 8-month low vs yen
* Treasury yields down on weak U.S. data, Fed talk
By Kevin Yao
SINGAPORE, Aug 4 (Reuters) - Asian stocks held on Wednesday
close to their three-month high but Japanese shares fell as the
dollar hit an eight-month low against the yen after weak U.S.
data fuelled talk of more Fed policy easing.
With the yen <JPY=> propped up near levels not seen since
1995, Tokyo stocks <> lagged the rest of Asia, sliding 1.5
percent on fears that the currency strength will erode
exporters' profits and sap economic growth.
Such concerns combined with a run of disappointing U.S.
data that cast a pall over recovery in the world's largest
economy, boosted Japanese government bonds, pushing the 10-year
yield <JP10YTN=JBTC> below 1 percent for the first time in
seven years.
Investors held their breath as Japan's finance minister
reiterated that he is closely watching currency moves as the
dollar's weakness tests the tolerance for a stronger yen as the
economy struggles to pull out of a crippling spell of
deflation. []
"Today's stock fall is really all about the yen. At this
kind of level, there's inevitably worries about what sort of
impact this will have on company earnings going forward," said
Toshiyuki Kanayama, a market analyst at Monex Inc.
Chip gear manufacturer Tokyo Electron <8035.T> lost 3.1
percent, while digital camera maker Canon Inc <7751.T> declined
3.7 percent and electronics parts maker Kyocera Corp <6971.T>
fell 2.3 percent.
However, markets elsewhere in the region were holding up
well with the MSCI Asia-Pacific index <.MIAPJ0000PUS> little
changed from three-month highs hit on Tuesday.
Overnight, both the Dow Jones industrial average <> and
the Standard & Poor's 500 Index <.SPX> fell as disappointing
earnings and U.S. consumer data trigged some profit-taking
after Monday's rally drove them to a 10-week high.
Data showed U.S. consumer spending and incomes were flat in
June while home purchase contracts tumbled to a record low,
implying an anaemic economic recovery for the remainder of this
year. []
U.S. Treasury debt climbed, sending two-year yields
<US2YT=RR> to an all-time low, as the data fanned speculation
that the Fed may launch a new round of debt purchases to inject
cash into the economy.
Some weak earnings added to such concerns, with quarterly
results from Dow Chemical Co <DOW.N> and Procter & Gamble
<PG.N> missing expectations.
Strong earnings have driven the stock market's recent
rally, even as economic data have generally disappointed.
WEAK DOLLAR
Talk of further dollar easing prompted investors to cut
their dollar exposure, pushing the U.S. currency as low as
85.40 yen, its lowest since late November before it inched back
to 85.51 <JPY=>.
A fall below a November low of 84.82 yen would take the
pair to its lowest level in 15 years.
"The market is full of dollar bears," said Ayako Sera,
market strategist at Sumitomo Trust & Banking. "Some are
speculating the Fed could announce a further relaxation of
policy at its meeting next week".
The euro hovered near $1.3230 <EUR=>, remaining within
sight of a three-month high of $1.3262 reached on Tuesday.
Stronger growth in Europe and Asia has supported the view
that central banks in those regions could raise interest rates
before the Fed.
Spot gold <XAU=> rose as far as $1,194.75 an ounce, the
highest in just over one week, as investors shifted out of
equities on concerns about the U.S. economy.
Oil <CLc1> fell as much as 41 cents to $82.14 a barrel
after touching $82.64 on Tuesday, the highest in three months.
(Additional reporting by Elaine Lies and Rika Otsuka in TOKYO,
Editing by Tomasz Janowski)
