* 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) - Asian stocks edged up while
the yen rose to a 15-year high on Tuesday ahead of a decisive
vote in Japan, leaving unclear whether a rally that lifted
global equities to the highest in four months can stay alive.
The yen has for the past few years been a gauge of
investors' distaste for risk-taking, rising when the need for
stability is high. For a yen PDF, click
http://r.reuters.com/zuz33p
Investors though have had mixed signals in September about
whether it is the right time 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."
Japan's ruling party was holding a leadership election on
Tuesday that will determine who is Japan's prime minister and
could have a big impact on how Tokyo deals with persistent yen
strength and deflation.
The U.S. dollar was down 0.4 percent to 83.34 yen <JPY=>
after earlier falling as low as 83.23 yen in 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, fell 0.2 percent to a one-month low after
weakening by the most in two months on Monday, as dealers
scooped up yen and Swiss francs.
Japan's Nikkei share average <> led Asia's declining
markets, falling 0.2 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
0.3 percent <.MIAPJ0000PUS>, having fallen for only two days so
far in September. The raw materials sector provided the biggest
lift, while sectors associated with safety from volatility
underperformed, a hopeful sign for equity bulls.
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.
The all-country world stocks index <.MIWD00000PUS> rose for
a fifth day to the highest since May 5.
While equity market traders tried to keep a rally going,
bond markets could hold a clue on investor sentiment on risk
taking.
A precipitous decline in the yield of the 10-year U.S.
Treasury note since April paused in September, while investors
reloaded on cheap equities and higher-yielding credit. The
resumption of declining U.S. yields could be an additional
weight on the dollar and a sign of interest in risk taking.
The U.S. 10-year yield was at 2.74 percent <US10YT=RR>,
roughly unchanged from where it was late Monday in New York.
Japanese 10-year government bond yields edged up 2 basis
points on the day to 1.17 percent <JP10YTN=JBTC>, giving way to
equity strength.
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> was trading at $77.25, having earlier
touched an intra-day peak at 78.04, the highest since Aug. 11.
(Additional reporting by Aiko Hayashi in TOKYO; Editing by
Nick Macfie)
