SINGAPORE, Nov 19 - The dollar sank to a record low against the euro on Wednesday as fresh U.S. restrictions on imports roiled financial markets, lifting gold to $400 an ounce for the first time since 1996 and smacking down stocks. Japanese shares fell almost three percent to a three-month low as Fujitsu <6702.T> and Vodafone unit Japan Telecom <9434.T> tumbled -- the latter by 15 percent. U.S. Treasury bond yields edged to six-week lows, while oil held near its highest levels since the Iraq war following a five percent jump in New York trade. The dollar was also struggling near three-year lows versus the yen after Washington said it would limit Chinese textile imports, extending trade restrictions already under fire following controversial steel import tariffs. "This sparked speculation that protectionism could sooner or later move Washington to weaken the dollar," to make its exporters more competitive, said Mitsuru Sahara, vice president of UFJ Bank's forex dealing group. The euro rose as high as $1.1978 before easing a tad to $1.1960 at 0600 GMT. Against the Japanese currency, the dollar fell as far as 107.94 yen , just above three-year lows of 107.86 hit last week. But it recovered to 108.12 on expectations Japanese authorities would intervene.
GOLD TOUCHES $400
The weakening dollar also fired up gold , briefly sending it through $400 an ounce for the first time since March 1996. Increasing attacks on the U.S.-led forces in Iraq and fears of al Qaeda strikes worldwide continued to boost the safe haven metal's appeal, although it retreated to $399.25. "Gold will be trading on a firm note as long as geopolitical worries are there and the U.S. economy has yet to rebound," said Leo Hadi Loe, a jewellery dealer in Jakarta. The stronger yen and a fourth day of falls in U.S. stocks hit Japanese shares, sending the Nikkei average <.N225> down 2.9 percent to 9,614.60, its lowest close since August 12. Electronics companies led the fall, with Fujitsu Ltd sliding 8.5 percent and Advantest Corp <6857.T> dropping 7.8 percent. Japan Telecom Holdings Co <9434.T>, a unit of Britain's Vodafone Group Plc , sank 15 percent after saying on Tuesday it fell deep into the red in the six months to September. The U.S. quotas hit shares in two Hong Kong-listed companies that make about half of the world's knitted cotton fabric, much of it in China.
Fountain Set (Holdings) Ltd <0420.HK> and Texwinca Holdings Ltd <0321.HK> dropped 3.5 percent and 5.4 percent respectively in morning trade as the Hang Seng Index <.HSI> fell 1.6 percent. Brokers in China said news of the U.S. move had not spread to the stock markets there, which pushed slightly higher. South Korea's benchmark index <.KS11> sank 3.7 percent on a widening investigation into a political funding scandal and fears over the health of credit card companies. Benchmarks elsewhere fell 1.5 percent in Singapore <.STI> and 1.3 percent in Taiwan <.TWII>, though Australia <.AXJO> gained 0.2 percent. An MSCI index of Asia Pacific shares outside Japan <.MSCIAPJ> fell 1.1 percent to a three-week low. The drop followed a fourth day of losses on Wall Street, where the Dow Jones Industrial Average <.DJI> lost 0.9 percent and the Nasdaq Composite Index <.IXIC> shed 1.5 percent.
BONDS GAIN
Bonds gained, pushing yields on benchmark 10-year U.S. Treasuries down to around 4.14 percent, near six-week lows. Japanese government bonds rose on the fall in Tokyo stocks. U.S. crude oil futures backed off after jumping nearly five percent in New York to hit their highest level since before the Iraq war in March. The gains had come on expectations auto fuel demand may rise for the U.S. Thanksgiving Day holiday next week, and on concern over a possible decline in American oil inventories. Crude fell 0.6 percent to $33.09 a barrel after rising as high as $33.35 in New York.//www..com