* Asia stocks rise modestly; Japan extends outperformance
in Nov
* Australia dollar under pressure, with policy on hold
next week
* Higher yields supporting U.S. dollar
By Kevin Plumberg
HONG KONG, Nov 24 (Reuters) - Asian stocks barely rose on
Thursday, kept on a short leash by profit taking in consumer
shares and investors cutting risk from their portfolios, a
shift that has lifted the U.S. dollar broadly to a two-month
high.
A rare bit of good news on the U.S. labour market
overnight was not met with investors' applause in the Asian
session, with other factors such as the fast closing window on
financing in the region and fears of the next fiscal domino to
fall in Europe keeping investors focused on preserving capital.
With equity markets off to a cautious start, the
Australian dollar -- which has become an indicator for risk
taking in the region -- slipped below US$0.98.
Japan's Nikkei share average was up 0.5 percent
, extending what has been a surprising
outperformance of the rest of the region this month.
The Nikkei has risen 9.5 percent so far in November, and
with three more trading days to go in the month is on track
for the best performing month since March.
The MSCI index of Asia Pacific stocks outside Japan
is down 1.3 percent in November,
perhaps collateral damage from the need of investors to hide
out in deeper markets until the new year.
The index was largely steady on the day, with
consumer-related sectors seeing a bias to sell.
"With growth above potential in many emerging markets,
particularly in Asia, the risk of broad-based inflation is
real and growing," Goldman Sachs analysts said in a note.
"And, as policy responds to this in the form of rate hikes
or nominal currency appreciation, equities -- stuck between
the pull of growth and the push of tightening policy -- are
likely to have a bumpier ride.".
In capital markets, bankers found even Asia's financing
stronghold of Hong Kong was having difficulty pushing deals
through given thinning market conditions and increased risks.
More than $3 billion worth of proposed IPOs in Hong Kong were
deferred, while Hong Kong Electric Holdings
delayed the pricing of its high-grade
10-year dollar bond to next week.
The Thanksgiving holiday in the United States will also
keep trading activity limited on Thursday.
The need for liquidity has not necessarily benefited U.S.
Treasuries, though higher yields have been a draw to the dollar.
After poor auctions of mid-maturity debt, the U.S. 5-year
yield hit a two-month high of 1.59 percent
overnight, having now risen more than 50 basis points
since the most recent Federal Reserve meeting.
Meanwhile, the U.S. dollar index , a
measure of its performance against six other major currencies,
was up 0.2 percent, heading back up to 80.00, a level that was
test overnight when the index hit the highest since Sept 24.
The high-yielding Australian and New Zealand dollars were
underperformers among G10 currencies on Thursday. Uncertainty
about what measures China may take to pull down inflation has
haunted these currencies.
