* Crude up $1 on storm threat to supply; equities firm
* Emerging markets at risk from slowing global growth
* Energy sector sees $1 bln in redemptions in week - EPFR
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, Aug 18 (Reuters) - The U.S. dollar slipped on
Monday, easing from a six-month high against the euro as gold
and oil prices rose, but slowing commodities demand was widely
seen supporting the currency in the medium term.
In the last several weeks, reports have confirmed the euro
zone and Japanese economies are shrinking, causing dealers to
erase expectations for interest rate increases and for emerging
markets investors to prepare for a potential backlash.
Asian stocks rose, led by Japan's Nikkei share average
<>, which jumped 1.8 percent as investors looked for
bargains after a recent market sell-off. Stock markets are also
hoping that slumping oil and commodity prices will shore up
faltering consumer demand in key export markets such as the
United States.
Fears about a protracted global slowdown have caused oil
prices to reflect a much lower so-called demand premium, as top
consumers like China ratchet down energy imports, though on
Monday U.S. light crude prices climbed almost $1 to $114.72 a
barrel on threats to supply in the Gulf of Mexico from a
tropical storm.
Still, the overarching trend for lower commodity prices and
a stronger dollar remained firmly in place.
"Fresh weakness in the European economic data and the
easing inflation threat given the sharp fall in oil prices had
the market shifting its focus to growth from inflation in
recent weeks," said Nizam Idris, currency strategist with UBS
in Singapore.
"This has helped the U.S. dollar, not due to any strong
U.S. macroeconomic data, but more due to the incremental
weakness in the other major economies," Idris said in a note.
Outside of Japan, the MSCI index of Asia-Pacific stocks was
largely unchanged, after earlier slipping to a fresh 17-month
low <.MIAPJ0000PUS>.
Australia's benchmark S&P/ASX 200 index <> rose 0.8
percent, led by shares of BHP Billiton <BHP.AX>, the world's
biggest mining firm, which is due to report annual results
later in the day.
Hong Kong's Hang Seng index <> was largely unchanged as
higher-than-expected earnings from Ping An Insurance <2318.HK>,
China's second-largest insurer, were overshadowed by a profit
warnings from the world's biggest contract manufacturer of
cellular phones, Foxconn International Holdings <2038.HK>.
Foxconn shares tumbled 12 percent on the news.
Shares of Doosan Corp <000150.KS>, a holding company for an
industrial equipment maker, rose 5 percent and were one of the
biggest boosts to South Korea's KOSPI <> on market chatter
Doosan Group would drop its bid for Daewoo Shipbuilding &
Marine Engineering <042660.KS>. []
FOREX
The dollar was down 0.2 percent against the yen <JPY=>
after touching a seven-month high on Friday above 110.60 yen.
The euro rose 0.3 percent to $1.4731 <EUR=>, after posting
its fifth weekly loss against the resurgent U.S. dollar.
Since mid July when oil prices peaked, the euro has tumbled
more than 8 percent to the lowest since February.
After crude's gains this year were cut by two thirds in the
past month, investors have slashed their exposure to the energy
sector and put money back into U.S. assets.
Last week, energy sector funds saw redemptions of more than
$1 billion, money flowed out of Middle East and Africa funds
for the first time this year and Brazil equity funds suffered
net outflows for the tenth consecutive week, according to EPFR
Global, a Boston-based firm that tracks $10 trillion in assets.
Asset-allocation strategists with JPMorgan said investors
should keep betting on government bonds and expect U.S. stocks
to outperform European equities in the current environment of
slowing global growth.
They also expect the U.S. dollar to continue strengthening
against the euro, Australian dollar and New Zealand dollar.
"Markets are sensing that global demand is weakening and
that economies outside the US are bearing the brunt of this
weakness. Even emerging markets growth, which showed remarkable
resilience in the first half, is at risk of falling below
trend," the strategists said in a weekly note.
"We continue to position for the intensification of growth
weakness outside the U.S. through the currency markets."
In the bond market, Japanese government bond futures rose
on expectations the Bank of Japan would keep rates on hold in
coming months with the economy possibly already in a recession.
At a two-day meeting starting on Monday, the BOJ is
expected to downgrade its view of the economy and keep interest
rates on hold at 0.5 percent. []
September futures <2JGBv1> rose 0.06 point to 137.75, in
sight of a four-month high of 138.12 hit last week.
The benchmark 10-year yield <JP10YTN=JBTC> edged down half
a basis point to 1.450 percent, near a four-month low of 1.415
percent touched last week.
Gold prices rose 1.2 percent to $795.30 an ounce <XAU=> in
the spot market on the recovery in oil prices. The yellow metal
slumped 8.2 percent last week, its biggest plunge since 1983,
triggering a broad decline in metals prices.
(Editing by Kim Coghill)
