* Japan stocks up, rest of Asia down ahead of U.S. vote
* Australia central bank seen cutting rates
* Yen, short-term government bonds still investor
favourites
By Kevin Plumberg
HONG KONG, Nov 4 (Reuters) - Japan's Nikkei index rose
nearly 4 percent on Tuesday, as exporters gained on the yen's
recent weakness, though other markets were down after reports
pointed to a shrivelling U.S. economy ahead of the presidential
election.
The elimination of uncertainty surrounding the election
could provide a short-term boost to the dollar and equities
though the longer-term impact on investor sentiment, especially
with regard to rescue policies shaped only in the last several
weeks, was unclear.
Meanwhile, economic data in Europe and the United States
indicated the strong likelihood both have slipped into
recessions, keeping oil prices trading below $64 a barrel and
pushing up gold prices.
"Depending on the actual results, the U.S. election may
provide some support to markets globally as it may be seen as
the promise of more fiscal stimulus, particularly if Obama wins
the election," currency strategists with Calyon in Hong Kong
said in a note.
The Nikkei rose 3.7 percent <> after a holiday on
Monday, having rallied a staggering 28 percent from a 26-year
intraday low hit a week ago.
Asia-Pacific stocks traded outside Japan fell 1.9 percent,
according to an MSCI index <.MIAPJ0000PUS>, snapping a five-day
winning streak. The index has retraced a third of the decline
that happened in the wake of Lehman Brothers' collapse in
mid-September, and was just shy of a 38.2 percent rebound, a
key technical obstacle.
South Korea's KOSPI <> rose 1.6 percent, up for a
second day after the government unveiled an additional $11
billion in tax cuts and other measures to boost the economy.
Hong Kong's Hang Seng index <> dropped 2 percent,
weighed by shares of companies sensitive to changes in oil
prices such as PetroChina <0857.HK> and CNOOC <0883.HK>.
Australia's benchmark S&P/ASX 200 index <> slipped 1.9
percent but was well above a 4-year low plumbed a week ago,
ahead of a policy decision from the Reserve Bank of Australia.
CUT, CUT, CUT
The RBA was widely expected to cut its cash rate by a
half-percentage point to the lowest since May 2006, action that
would show solidarity with the Federal Reserve and the Bank of
Japan, which both reduced borrowing costs last week.
The European Central Bank and the Bank of England will
probably both cut rates after they meet on Thursday, as
policymakers race to keep their economies tumbling into deep
recessions.
Synchronised rate cutting by central banks around the world
as well as emergency government spending packages worth some $4
trillion have brought back investors from pushing markets down
an abyss. However, some analysts say it may be premature to
dive back into risky assets.
"We expect another major episode of risk aversion to take
hold of markets in the near future, with the potential for
commodities and stocks to hit new lows for the year. This would
bode well for the yen and short ends of G-3 bonds," said
Dariusz Kowalczyk, chief investment strategist with CFC Seymour
in Hong Kong.
The U.S. dollar slipped 0.2 percent to 98.97 yen <JPY=>
after rising as high as 99.36 yen in early Asian trade on
trading platform EBS. The dollar is expected to stay below the
psychologically important 100 yen level since Japanese
exporters are expected to sell dollars to repatriate their
profits. Many exporters are assuming a rate of 100 yen in their
business plans for the fiscal year ending in March.
The euro fell 0.3 percent against the yen to 124.90 yen
<EURJPY=R>.
Commodity prices have been clobbered on expectations of
easing demand. Global manufacturing activity contracted for a
fifth consecutive month in October, falling to a record low, a
JP Morgan Global Manufacturing PMI survey showed, and U.S. car
sales dropped by a third to the lowest in 25 years.
U.S. crude for December delivery <CLc1> was trading down 12
cents, or 0.2 percent, at $63.79 a barrel, after settling down
$3.90 on Monday.
Gold in the spot market rose 0.7 percent to $727.50, though
weak physical demand kept a lid on prices.
(Editing by Lincoln Feast)
