* Party vote in Tokyo is focus of yen, Japan stocks
* US retail sales due later could determine risk rally's
fate
* Third time a charm for S&P 500's 200-day moving average?
By Kevin Plumberg
HONG KONG, Sept 14 (Reuters) - The yen rose to a 15-year
high on Tuesday ahead of a decisive vote in Japan, weighing on
the country's equities and leaving unclear whether a rally that
has lifted global stock markets to the highest in a month can
last.
The yen has for the last few years been an accurate gauge
of investors' distaste for risk-taking.
http://r.reuters.com/zuz33p
Japan's ruling party was holding a leadership election on
Tuesday that will determine who is Japan's prime minister,
which could have a big impact on how Tokyo deals with
persistent yen strength and deflation.
Investors have had mixed signals about whether it is safe
to shift out of havens and buy back riskier, higher-yielding
assets.
Resilient economic growth out of China and relief that new
banking regulations will not unleash a rush to raise equity
have gently turned the attention of investors away from
uncertainty about the U.S. recovery.
August U.S. retail sales due later could be a reminder
though of how much the economy is slowing.
"Although better data in the U.S. and China and the
agreement in Basel on new regulations have boosted risk
appetite, the moves are already beginning to look exhausted,"
Mitul Kotecha, global head of foreign exchange strategy at
Credit Agricole CIB, said in a note.
"It would be easy to jump on the bandwagon but after the
sharp gains registered over recent days we would suggest taking
a cautious stance about jumping into risk trades at current
levels."
The U.S. dollar was down 0.4 percent to 83.35 yen <JPY=>
after earlier falling as low as 83.23 yen is busy trade.
TOO CLOSE TO CALL
The race between Prime Minister Naoto Kan and party
heavyweight Ichiro Ozawa was too close to call, Japanese media
surveys showed, ahead of a party conference due to start at
0500 GMT. Analysts generally agree an Ozawa victory could cause
the yen to weaken, since he is more open to government
intervention to stop the currency's 11 percent climb this year.
http://r.reuters.com/myv63g
The U.S. dollar index <.DXY>, a measure against six other
major currencies, was flat on the day after falling by the most
in two months on Monday as dealers scooped up euros and other
higher yielding currencies.
Japan's Nikkei share average <> led Asia's declining
markets, falling 0.6 percent. The strong yen has been a lead
weight on Japanese stocks, causing them to underperform other
advanced markets.
"While opinion polls have favoured Kan, the stock market
overwhelmingly would want to see Ozawa win because he is seen
to be a more aggressive leader, including his view on
currencies," said Kenichi Hirano, operating officer at
Tachibana Securities in Tokyo.
The Nikkei has not risen above its 200-day moving average
since early May. The U.S. S&P 500 index <.SPX> on the other
hand has breached the key long-term indicator three times since
May, including overnight. A third failure to stay above the
200-day moving average could trigger a bout of profit-taking.
The MSCI index of Asia Pacific stocks outside Japan was up
0.1 percent <.MIAPJ0000PUS>, lifted by the raw materials
sector. The index is struggling to post a fourth straight
session of gains, having fallen for only two days in September.
The index is trading at 11.7 times expected earnings a year
from now, still way below the five-year average of 13.2 times,
suggesting there are still more bargains out there, Thomson
Reuters I/B/E/S data showed.
Oil was steady near a one-month high with the shutdown of
the biggest Canada-U.S. pipeline entering a fifth day. U.S.
crude for October <CLc1> declined 0.1 percent to $77.13, having
earlier touched an intra-day peak at 78.04, the highest since
Aug. 11.
(Additional reporting by Aiko Hayashi in TOKYO; Editing by
Alex Richardson)
