The dollar fell to multi-month lows against major currencies on Friday on increased worries the U.S. economy was slowing, while Asian stocks held largely steady despite a slump on Wall Street to six-week lows. Tokyo's benchmark Nikkei average rose modestly in its morning session, partly as investors sought bargains among hard hit technology shares. Stocks outside Japan were flat. The dollar's slide was compounded by the strength of oil prices, which held close to one-month highs above $40 a barrel, and a warning by U.S. authorities that al Qaeda may try to carry out a major attack ahead of November presidential elections. Gold, which has gained from its traditional safe-haven status as investors fled the U.S. currency and stocks, shaved some recent gains but held ground above $400 an ounce. The euro rose as high as $1.2420 on Friday, its highest exchange rate since March 18. "It's all to do with the terror threat and oil prices," said Jake Moore, forex strategist at Barclays Bank in Tokyo. "When there are big moves up in the oil price, euro/dollar tends to rise." Sterling hit $1.8555, just shy of a three-month high of $1.8582 and the Canadian dollar rose to a 3-month peak of 1.3138 per U.S. dollar. The Australian dollar traded around 72.30 U.S. cents, also near a three-month high.
The dollar was changing hands at 108.50 yen , down from 108.92 on Thursday. Weekly U.S. jobless claims data and disappointing June sales reports from retailers reinforced recent corporate reports warning that future sales might not match up to expectations. U.S. Homeland Security Secretary Tom Ridge said on Thursday there wwere credible reports al Qaeda might try to disrupt November's elections by carrying out a large-scale attack. However, he did not raise the terror alert level. These concerns weighed on Wall Street, pushing down the Dow Jones industrial average <.DJI> 0.67 percent to 10,171.56 and the tech-heavy Nasdaq Composite Index <.IXIC> 1.56 percent to 1,935.32, both marking their lowest readings since May.
ELECTION WORRIES
Buying of technology and bank shares helped the Nikkei average <.N225> advance 0.42 percent to 11,369.73 at Tokyo's midday break. But worries about the showing of the ruling Liberal Democratic Party in Sunday's Upper House election weighed on sentiment. If the LDP loses support it could undermine the government's chances of pushing through economic reforms. Trend Micro Inc. <4704.T>, the world's third-biggest anti-virus software maker, rose 2.77 percent, recovering some of its losses earlier this week. Electronic parts maker Kyocera Corp. <6971.T> gained more than 1 percent, and bank UFJ Holdings Inc. <8307.T> rallied 4.18 percent. The MSCI index for stocks trading in Asia outside Japan <.MSCIAPJ> was down a marginal 0.03 percent at 0250 GMT. Singapore <.STI>, Taiwan <.TWII>, Seoul <.KS11> and Australia <.AXJO> were all slightly lower. Hong Kong's Hang Seng index <.HSI> was up 0.36 percent. Gains in Samsung SDI <006400.KS>, the world's second-largest maker of LCD screens for mobile phones and LG Electronics <066570.KS>, a consumer electronics maker, rose 4.69 percent and 3.56 percent respectively, to bolster Seoul. Their gains followed a bullish earnings report from LG.Philips LCD Co. Ltd., a joint venture between LG Electronics and Philips Electronics NV. .
GOLD, OIL
Spot gold was trading around $406.15 an ounce, down from $408.70 on Thursday, its highest price since mid-April. U.S. light crude futures were flat at $40.33 a barrel, close to Thursday's high of $40.40 a barrel, the highest since June 3, underpinned by data indicating high U.S. gasoline demand. Japanese government bond prices fell slightly in the face of resilient stocks and over the Japanese election worries. The benchmark 10-year JGB yield <0#JPTSY=JBTC> was at 1.78 percent, up from 1.755 percent on Thursday.////