SINGAPORE, May 9 - The euro hit fresh four-year highs on Friday after the European Central Bank left interest rates unchanged, while Japanese stocks gained on hopes the government would step in to boost the market. Other Asian stocks markets dipped after U.S. shares fell on weak jobs data and retail sales reports. Oil was steady near two-week highs hit on Thursday. Gold eased off a two-month high struck overnight, while Japanese government bond yields hit fresh record lows. The ECB's decision on Thursday to keep rates at 2.5 percent maintained the attraction of euro deposits for investors hungry for higher yielding bets. A comment by ECB chief Wim Duisenberg that there was nothing excessive about the current level of the euro also helped the single European currency rise to four-year peaks at $1.1535 and 135.11 yen .
"The trend of strong euro and weak dollar looks set to continue," said Kosuke Hanao, head of foreign exchange sales at the Royal Bank of Scotland in Tokyo. The euro's rise against the yen and speculation of Japanese intervention helped the dollar firm to 117.25 yen , well above a 10-month low of 116 yen hit on Thursday. That offered relief to Japanese stocks, which had fallen on Thursday on worries the yen's strength would hurt exporters' earnings.
WILL JAPAN BOOST MARKET?
Stocks rebounded on Friday on hopes the government would next week adopt some of the market boosting proposals discussed on Thursday at a meeting of the top economic advisory panel. "There was such a raft of proposals that came out of yesterday's government meeting," said Hiroshi Sato, general manager at equity department at Cosmo Securities. "Obviously we don't know yet which will actually be achieved, but with several possibilities, hopes are being driven up." The Nikkei average <.N225> ended the morning up half a percent at 8,071.00. Most other Asian stock markets were a touch weaker following losses on Wall Street. Hong Kong <.HSI> was flat, Australia <.AXJO>, Singapore <.STI> and South Korea <.KS11> lost 0.2-0.4 percent.
Taiwan <.TWII> bucked the trend, adding one percent as chip maker Taiwan Semiconductor Manufacturing Co <2330.TW> gained on a strong revenue forecast from its largest customer, graphics chip designer Nvidia Corp . On Wall Street, the Dow Jones Industrial Average <.DJI> fell 0.8 percent and the Nasdaq Composite Index <.IXIC> declined 1.1 percent after data showed claims for first-time unemployment benefits remained above 400,000. Major U.S. retail chains all missed their sales targets for the month and several retailers forecast weak quarterly earnings.
Oil prices were little changed after rising three percent on Thursday on a fall in U.S. oil inventories and an explosion on a U.S. warship in the northern Arabian Sea. U.S. light crude stood at $27.05 per barrel, up a quarter of a percent, with the prospect of a return of Iraqi oil to world markets capping gains. Gold eased after soaring to a two-month high overnight as the dollar's fall against the euro made the precious metal cheaper for holders of other currencies. "I'm not surprised that profit taking has set in given gold's recent run," Commonwealth Bank of Australia chief commodities strategist David Thurtell said. Gold fell to $347.20 an ounce, from $348.25 at the end of U.S. trade. Japanese government bonds <0#JPTSY=JBTC> rose, pushing yields to fresh record lows following a solid auction of 10-year bonds on Thursday. The 10-year yield fell to 0.580 percent and the 20-year yield to 0.885 percent.//