The dollar rebounded on Thursday, lifting shares of some Asian exporters, after the Federal Reserve raised interest rates as expected and indicated it would press ahead with further increases at a measured pace. U.S. light crude stayed close to $49 a barrel after jumping more than 3 percent in New York, supported by the prospect of an early cold snap in the United States that could put a strain on a thin supply cushion of winter heating fuel. Gold prices were little changed around $432 an ounce, below 16-year highs, while Japanese government bond prices hit two-week highs on weaker-than-expected machinery orders data. Tokyo's Nikkei stock index <.N225> closed down 1.4 percent at 10,846.92 after the data showed machinery orders, a key gauge of trends in capital spending, fell 1.9 percent in September from August, against forecasts for a 0.1 percent rise.
"The initial reaction is it's a sell for the stock market, but I think this impact should be short-lived," said Tsuyoshi Nomaguchi, strategist at Daiwa Securities. Stock benchmarks elsewhere in the Asia Pacific region <.MSCIAPJ> hit their highest level in four years as a rebound in the dollar boosted the value of exporters' overseas sales. But the MSCI Asia technology index <.MSCIAPJIT> dropped 1 percent after Morgan Stanley lowered its 2005 revenue and capital spending forecasts for the semiconductor sector. The Federal Reserve raised the key federal funds rate a quarter percentage point to 2 percent, citing healthier job markets, and indicated it would press on with a rate rise campaign. "Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved," the policy-setting Federal Open Market Committee said. With the world's largest economy showing signs of improvement, the U.S. central bank is widely expected to raise rates for a fifth time this year at a meeting on Dec. 14.
DOLLAR RECOVERS
The euro stood around $1.2875 , down more than 1 cent from a record high of $1.3006 hit in New York. The dollar held steady at 107.00 yen , just 0.2 percent off a two-week high of 107.30 hit in New York and compared with Monday's seven-month low of 105.28 yen. Data showing the U.S. trade deficit narrowed in September also helped the dollar recover. The monthly trade gap totalled $51.6 billion, down from a revised $53.5 billion in August, thanks to strong exports. "I think the U.S. trade figure was the main reason the dollar recovered," said Tohru Sasaki, chief strategist at JPMorgan Chase. The Australian dollar reached a seven-month high of $0.7649 offshore, but retreated after the U.S. dollar gained. Oil prices, which hit a record high of $55.67 a barrel on Oct. 25., rose in New York after data showed distillate stocks fell by 100,000 barrels to 115.6 million last week, rekindling worries about thin supplies ahead of the northern winter. Inventories are 13 percent below last year's level.
ASIAN TECHS FALL
Higher oil prices and falls in technology issues hurt some Asian stock markets. Taiwan's benchmark index <.TWII> dropped 1.2 percent, led by a 3.5 percent tumble in Taiwan Semiconductor Manufacturing Co. Ltd. <2330.TW>. That followed a 2.4 percent decline in the Philadelphia Semiconductor Index <.SOXX> and a 0.4 percent drop in the tech-heavy Nasdaq <.IXIC>. Shares rose 0.4 percent in Australia <.AXJO> to a record closing high, lifted by 1.4 percent gains in miners BHP Billiton and Rio Tinto . South Korea <.KS11> pared gains made on an unexpected cut in interest rates to close up 0.08 percent. Hong Kong shares <.HSI> were flat, but clothing retailer Esprit Holdings <0330.HK> sank 4.7 percent following a share sale by its chairman. In Japan, Kyocera Corp. <6971.T>, the world's largest maker of ceramic casings for semiconductor chips, fell 2.1 percent and chip equipment maker Tokyo Electron Ltd. <8035.T> dropped 2.5 percent ahead of its half-year earnings report. Electronics company Sony Corp. <6758.T> climbed 0.8 percent. Japanese government bond prices rose, pushing the yield on the benchmark 10-year cash bond <0#JPTSY=JBTC> down 2.5 basis points to a two-week low of 1.455 percent.///