* Singapore lets currency appreciate more, knocks U.S.
dollar
* Aussie close to U.S. dollar parity, yen at 15-year high
* Stocks, commodities gain as dollar index hits 10-month
low
* Resource-related stocks lead gains among Asia sectors
By Kevin Plumberg
HONG KONG, Oct 14 (Reuters) - The U.S. dollar fell broadly
to a 10-month low on Thursday after Singapore unexpectedly
tightened policy by letting its currency strengthen, lifting
Asian stocks and copper to two-year peaks and gold to a record
high.
Major European stocks opened higher, mirroring gains in
Asia, with the FTSEEurofirst 300 <> up 0.3 percent in
early trade to 1,089.22.
The move by Singapore, viewed by analysts as a preemptive
strike before policy loosening by the U.S. Federal Reserve
sends more investment to Asia, underscored the global currency
tensions that have sparked a war of words among some
policymakers.
Indeed, the dollar's decline to near parity against the
Australian dollar <AUD=> and a 15-year low against the yen were
fresh reminders about the U.S. currency's dim prospects on
expectations the Fed will soon have to flood the financial
system with more newly printed money, or quantitative easing.
"One thing that people underestimate is that the U.S. will
do everything in its power to reflate the economy. It's not
just a question of QE2, but if required they will do QE3, QE4
etc," Pranay Gupta, chief investment officer for ING Investment
Management Asia Pacific, said.
"Like it or not, loose monetary policy is here to stay and
money flow coming out of the U.S. and into Asia is here to
stay," said Gupta, who oversees $85 billion in assets.
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For more on global currency tensions, click on:
[]
For a story about Singapore's policy action, click on:
[]
For a chart on Australian dollar parity, click on:
http://link.reuters.com/raq48p
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With the next Fed policy meeting and the next G20 summit
still weeks away, the well-worn trade of selling dollars to buy
emerging market stocks, commodities and longer-term bonds was
still in play.
Singapore's monetary authority surprised traders by
tightening policy, which it manages through a secret band in
which its currency is allowed to trade. The news prompted the
U.S. dollar to fall broadly, pushing up the euro to an
eight-month high around $1.4095 <EUR=>.
"It is a pre-emptive move," Chua Hak Bin, an economist with
Bank of America Merrill Lynch, said of the Singapore decision.
"Another Fed package would have brought interest rates even
lower and driven more capital flows into Singapore."
The U.S. dollar index <.DXY>, which measures the dollar's
performance against six other major currencies, slid 0.7
percent to the lowest since December 2009.
The Australian dollar was at US$0.9963 <AUD=>, up 0.7
percent on the day and within sight of parity, something not
seen since 1982.
Australia's currency, which has benefited from having
relatively high yields among G10 currencies, has risen 9.3
percent since September.
The falling U.S. dollar lifted gold prices 0.7 percent to
$1,380.45 an ounce <XAU=>, a record high, and copper traded on
the London Metal Exchange <CMCU3> up 1.5 percent to $8,487.00 a
tonne, its highest since July 2008.
Climbing commodity prices have been a boon for
resource-related shares, and the materials sector gave the
biggest lift to MSCI's index of Asia Pacific stocks outside
Japan <.MIAPJ0000PUS>.
The index was up 1.5 percent to the highest since June
2008, having risen 14.5 percent since September, outpacing the
11 percent rise in the all-country world index <.MIWD00000PUS>.
Japan's Nikkei share average led gainers in Asia, up 2
percent <>. Resource stocks led the rise, although
analysts said the yen's strength would limit the market's
upside potential.
Gains in oil-related stocks helped to push up Hong Kong's
Hang Seng index 1.1 percent <> to a 28-month intraday high.
China Petroleum & Chemical Corp (Sinopec) <0386.HK> stock
rose 1.2 percent after analysts at Bank of America Merrill
Lynch added the stock to its Asia Pacific Focus 1 portfolio, a
list of its highest conviction buy-rated stocks.
