The dollar surged against the yen on Tuesday and Asian stocks picked up the firm tone of Wall Street as a second round of data boosted optimism about economic growth in the United States. Tokyo's Nikkei average topped 12,000 points for its highest close in 32 months as the dollar jumped above 107 yen from below 105 yen on Monday. "People who are already very sensitive about the Nikkei's rise thought the yen's retreat would provide further impetus for stock prices to rally," said Hiroyoshi Sandaya, a fixed income analyst at Goldman Sachs in Tokyo. Sydney's benchmark index hit a two-year peak and a record high in heavyweight technology share Samsung Electronics <005930.KS> pushed Seoul to a sharp rise. European stocks were expected to take their cue from Asia. U.S. stocks rose to their highest closing levels in a month on Monday after a report showing strong growth in the country's massive services sector.
Hot on the heels of a bigger-than-expected rise in March non-farm payrolls, the report provided another boost to confidence in the outlook for the world's biggest economy. The dollar rose to a four-month high against the euro of $1.1980. In a few hectic minutes of trading, the dollar rose more than a yen to around 107.25 yen from 106.20 yen, before paring some of the gains. It was trading at 106.40 at 0654 GMT. The rising dollar has cooled red-hot commodities prices because it makes them more expensive in other currencies. Concern the U.S. economy is expanding faster than previously thought has hit bond prices on the prospect that interest rates will start to rise sooner than expected. Analysts see a pick-up in U.S. employment as key to the Federal Reserve raising interest rates from one percent, the lowest since 1958. But equities have risen on hopes that a stronger U.S. economy will underpin global growth.
JAPAN BANKS RISE
Japanese government bond (JGB) prices fell to a five-month low. The 258th 10-year cash JGB <0#JPTSY=JBTC> <0#JPBMK=> hit a yield of 1.53 percent, as the market factored in a government sale of 1.9 trillion yen ($18 billion) in 10-year debt. Base metals were all lower and spot gold , which reached more than $430 an ounce last week, was around $415.50. The dollar strength added another worry for oil prices, which have been slipping on scepticism the OPEC cartel will abide by its official production limits. U.S. light crude prices were down just two cents at $34.36. Tokyo's Nikkei <.N225> gained one percent, helped by buying of banks and technology stocks. Sony Corp <6758.T> rose 0.4 percent and Hitachi <6501.T> firmed 0.5 percent. Banking giant Mizuho Financial <8411.T> surged 6.8 percent and Resona Holdings <8308.T> galloped 9.2 percent higher. The MSCI index <.MSCIAPJ> of stock markets in Asia outside Japan was 0.6 percent higher at 239.73. Samsung, the world's biggest memory chip maker, rose to a record 595,000 won, up 5.3 percent, boosting the benchmark Korea Composite Stock Price Index <.KS11> 2.6 percent to 906.19. Australia's S&P/ASX 200 index <.AXJO> firmed to 3,465.1, its highest since March 2002, before cooling to close at 3,455.9. The Hang Seng index <.HSI>, closed on Monday for a holiday, was 1.6 percent higher at 12,933.41 in afternoon trade. Investors appeared to shrug off worries Beijing had dealt a blow to Hong Kong's democratic aspirations by saying it had the power to decide on electoral reforms, traders said. The Dow Jones industrial average <.DJI> rose 0.84 percent to 10,558.37 on Monday. The technology-focused Nasdaq Composite Index <.IXIC> rose one percent to 2,079.12. Both were boosted by a report from the Institute for Supply Management, which showed its non-manufacturing index surged to a record 65.8 in March from 60.8 in February, well above the median forecast of 61.5. A number above 50 indicates growth.///www.reuetrs.com