* Oil falls again, copper slips but gold firms
* U.S. dollar testing week highs
* Strong U.S. data builds optimism
By Sanjeev Miglani
SINGAPORE, Jan 5 (Reuters) - A sudden drop in commodity
prices prompted investors to take profits on Asian stocks on
Wednesday while the U.S. dollar held firm ahead of job data
due later in the week, though the bull market in raw materials
was seen as far from over.
Oil fell for a second day to near $89 a barrel, extending
the previous session's 2.4 percent drop as investors sold off
commodities after a strong year-end rally. Gold inched up,
though, after sinking more than 2 percent on Tuesday.
S&P futures <SPc1> slipped 0.2 percent, pointing to a
softer opening on Wall Street later in the day.
The fall in commodities to their lowest level in seven
weeks and a stronger dollar weighed on shares of resource
companies in Asian trade, although market analysts said it was
likely to have only a limited impact.
"As long as emerging nations keep their firm economies,
notably China, commodities will likely stay on an upward
trend, but there will surely be some profit-taking from time
to time if prices go too high," said Ayako Sera, market
strategist at Sumitomo Trust & Banking in Tokyo.
The MSCI index of Asian shares excluding Japan
fell 0.70 percent with technology and energy
sectors the biggest decliners, while the consumer
discretionary sector outperformed.
Shares in Hyundai Motor Co rose 6.2 percent on
strong U.S. auto sales and a court approval for its takeover
of top builder Hyundai Engineering & Construction Co Ltd
. []. The broader KOSPI was
down 0.19 percent.
Australian stocks fell 0.6 percent, pulling the index to
its lowest close in nearly a month, hurt by the commodities
sell-off and fears that massive floods in northern Queesland
state would hurt miners. The Australian dollar fell to
one-week lows.
Japan's benchmark Nikkei closed down 0.2 percent,
with investors largely shrugging off concerns about commodity
prices and looking instead to U.S. non-farm payrolls data on
Friday to provide further evidence of a sustained economy
recovery.
"Investors are focusing on the U.S. payroll data, so they
may stay on the sidelines for this week, but the mood is
positive," said Hiroichi Nishi, general manager at Nikko
Cordial Securities.
The U.S. dollar bounced from three-week lows against the
euro on Tuesday and held firm in Asia trade at around 82 yen
after upbeat U.S. maufacturing data, and more gains are
seen likely given the heavy sales of euro zone bonds
anticipated this year.
The dollar index, which measures its value against major
currencies, edged up 0.2 percent to 79.577 . The dollar
index is up around 0.6 percent this week, having regained some
ground after sliding 1.8 percent last week.
"Incoming U.S. data is quite good and that's part of the
reason why I think the dollar is going to remain with a
reasonable bid tone," said Richard Grace, chief currency
strategist at Commonwealth Bank.
There was little reaction in Asian markets to minutes of
the Federal Reserve's December meeting released on Tuesday,
which revealed policy makers felt the U.S. economy still
needed help despite signs of strength. []
The U.S. economy, having emerged from its deepest
recession in generations in the summer of 2009, has since
expanded in fits and starts. Gross domestic product rose at a
2.6 percent annual rate in the third quarter, a pace still
seen as too low to bring down the country's 9.8 percent
jobless rate.
U.S. Treasuries inched up in Asia on Wednesday as
investor appetite for riskier assets like stocks and
commodities cooled slightly after a bullish start to the year.
The benchmark 10-year Treasury note rose 3/32
in price to yield 3.31 percent, down about 2 basis points from
late U.S. trade on Tuesday.
The stronger dollar weighed on copper futures in London
and Shanghai after prices slid from record highs in the
previous session.
Crude oil <CLc1> slipped 20 cents to $89.18 a barrel,
extending Tueday's losses, but spot gold rose 0.3
percent to $1,383.40 an ounce.
(Additional reporting by Ian Chua in SYDNEY; Editing by Kim
Coghill)
