* Ruling party wins vote in Tokyo, lifting yen
* US retail sales due later could affect 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 jumped to a 15-year high on Tuesday after an election
in Japan kept the status quo, leaving unclear whether a rally
that lifted global equities to a four-month high can stay
alive.
European shares slipped, with some caution ahead of data
from Germany and the United States. By 0710 GMT, the
pan-European FTSEurofirst 300 <> index of top shares was
down 0.1 percent at 1,087.42 points, after closing on Monday at
its highest level since late April.
The yen has for the past few years been a gauge of
investors' distaste for risk-taking, strengthening when the
need for stability is high. Politics though influenced the yen
on Tuesday.
Investors 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.
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Japan PM survives but challenges remain
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Yen PDF package of stories
http://r.reuters.com/zuz33p
Basel eases capital fears, top banks in spotlight
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China economy shows inner strength
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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."
Japanese Prime Minister Naoto Kan won a leadership election
on Tuesday ensuring in the eyes of traders that Tokyo will
maintain a cautious approach to battling yen strength and
further borrowing to stimulate economic growth.
The U.S. dollar was down 0.5 percent to 83.30 yen <JPY=>
after earlier falling as low as 83.10 yen in busy trade.
YEN BULLS ON PARADE
With the election out of the way, dealers rushed back into
their bets on more yen strength, riding the momentum that has
lifted the currency 11 percent this year to the consternation
of officials concerned about exports.
The U.S. dollar index <.DXY>, a measure against six other
major currencies, was largely unchanged on the day after
earlier hitting a one-month low, as dealers scooped up yen and
Swiss francs.
Japan's Nikkei share average <> closed 0.2 percent
lower before the poll results were released, unable to break
above a downward sloping trend line stretching from April. The
strong yen has been a lead weight on Japanese stocks, causing
them to underperform other advanced markets.
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 2.73 percent <US10YT=RR>,
down 2 basis points from where it was late Monday in New York.
Japanese 10-year government bond yields fell 5 basis points
on the day to 1.10 percent <JP10YTN=JBTC> after Kan's victory.
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 $77.16, 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)
