By Tom Miles
HONG KONG, April 15 (Reuters) - Oil and gold prices gained
on Tuesday as the dollar struggled to attract buyers due to
signs of a weak earnings season for U.S. banks, which could
expose yet more subprime losses and punish stocks worldwide.
Asian stocks edged higher, trimming losses from the
previous session, but worries about the credit crisis and a
weak dollar kept sentiment cautious.
The dollar had won support from the Group of Seven nations
over the weekend but their words were quickly drowned out and
the currency fell back by the end of Monday and remained under
pressure early on Tuesday, with one dollar buying 101.25 yen
<JPY=> and one euro <EUR=> fetching $1.5815.
"The broad weak dollar trend hasn't changed, and the market
is returning to economic data and earnings results this week
for clues, with the bias towards dollar selling," said a senior
dealer at an European bank in Tokyo.
The currency's weakness helped spur London Brent crude oil
futures <LCOc1> to a record high of $110.04, while U.S. crude
<CLc1> wavered around $112.00, just shy of another record. Gold
<XAU=> followed oil's lead, inching up to $927.40/8.20 by 0117
GMT.
Oil and metals prices have also gained from supply problems
in recent months and oil's latest surge was helped by bad
weather shutting 80 percent of Mexico's oil exports
[].
"The system is so tight that any supply problems cause real
concern," said Robert Nunan of Mitsubishi Corp in Tokyo. "We
just don't have the big cushion any more that we used to have,
so it's much easier for money to come in and prop up prices
now."
SCORCHED AGAIN
But stock market investors, who have repeatedly ventured
into an apparently rock-bottom market only to get scorched
again, were in no rush to buy up shares that could still be
vulnerable.
"There is no doubt that the impact of the credit squeeze on
funding costs has increased for companies that probably had
nothing to do with the subprime debacle, and companies that do
have seen major writeoffs," said Tony Russell, senior equities
adviser at ABN AMRO Morgans in Ipswich, Queensland.
"We're going to see more of that in the next quarter or
two."
Stirring fresh credit worries, Wachovia Corp <WB.N>, the
No. 4 U.S. bank, posted a surprise first-quarter loss,
prompting it to raise $7 billion of capital, slash its dividend
and cut jobs [].
For a preview of other U.S. bank earnings, please click on
[]
"After the news about Wachovia, investors couldn't actively
buy financials, but they now appear somewhat willing to buy on
dips as they are factoring in weak results from the sector,"
said Zenshiro Mizuno, a senior managing director of the equity
trading division at Marusan Securities in Japan.
"Still, trade will likely be quiet as investors want to see
results from banks such as Citigroup."
Japan's Nikkei average <> clawed back 0.9 percent
after falling 3 percent on Monday, while MSCI's measure of
other Asia Pacific stocks <.MIAPJ0000PUS> was up 0.3 percent.
One market participant in Japan said investors were
returning to blue-chips such as Toyota Motor Corp <7203.T> and
Takeda Pharmaceutical Co Ltd <4502.T>, which looked cheap after
the sell-off, but the market was nervous ahead of U.S. bank
earnings.
But Japanese government bonds, normally a refuge for
rattled equity investors, slipped after U.S. data showing a
surprise rise in retail sales, easing some worries about a
consumer pull-back causing a deep recession. []
Prices also fell in anticipation of a 600 billion yen ($5.9
billion) auction of 30-year bonds later in the session. June
10-year futures <2JGBv1> dropped 0.35 points to 139.55, falling
back near a one-month low of 139.13 struck last week.
(Additional reporting by Geraldine Chua in SYDNEY, Annika
Breidthardt in SINGAPORE, Aiko Hayashi and Chikako Mogi in
TOKYO; Editing by Lincoln Feast)
