The dollar edged up from record lows against the euro on Tuesday and Tokyo shares rose in cautious trade as investors prepared for an expected rise in U.S. interest rates and Japanese economic growth figures. Other Asian indexes were mixed, bonds slipped and gold prices were little changed around $433 an ounce after rising to $435 for the first time since August 1988 in New York. U.S. oil prices held steady around $49.15 a barrel. Tokyo's Nikkei share average <.N225> closed down 0.2 percent at 10,964.87 amid caution ahead of a Federal Reserve meeting on Wednesday and Japanese gross domestic product data on Friday. "Some are saying GDP will be weaker than expected so we have to see that (GDP). The market is likely to go down a bit by Friday, though, because of the uncertainty," said Michael Coates, director of equity sales at KBC Financial Products. Mazda Motor Corp. <7261.T> rose 1.9 percent after it posted better-than-expected half-year results and raised its full-year forecast. Canon Inc. <7751.T> dropped 1.1 percent and Sony Corp. <6758.T> fell 0.8 percent as investors fretted over the dollar's weakness and its impact on corporate profits. Concern over the the outlook for the Japanese economy weighed on bank shares.
An MSCI index of Asia Pacific shares outside Japan was flat at 0615 GMT, while global stocks as measured by the MSCI World index <.MSCIWD> stood almost half-a-percent below three-year highs hit on Friday. A two percent fall in Samsung Electronics Co. Ltd. <005930.KS> and a rise in the won to its highest level against the dollar since the 1997 Asian financial crisis pulled South Korean shares <.KS11> 0.2 percent lower. Australia's benchmark index <.AXJO> rose 0.4 percent, while Hong Kong's Hang Seng index <.HSI> fell 0.4 percent and Taiwan stocks <.TWII> closed up 0.1 percent. United Microelectronics Corp. <2303.TW> , the world's second-largest contract maker of microchips, said after the Taiwan market closed its October revenue slipped 15.2 percent from September.
DOLLAR EDGES UP
The dollar's slide was halted by comments from European Central Bank President Jean-Claude Trichet, who said the euro's recent rise was brutal and unwelcome. The euro fetched around $1.2916 , up slightly from the late New York level of $1.2920 and about half a percent off a record high of $1.2987 hit on Monday. The market brushed aside comments by Japanese Finance Minister Sadakazu Tanigaki that Japan would take action if currency rates deviated from economic fundamentals. The dollar gained versus the Japanese currency to 105.65 yen , compared with 105.48 in late U.S. trade, and was 0.4 percent off a seven-month low of 105.28 yen. "The market is taking a break from the recent dollar selling and it doesn't appear that the selling will resume in full force just yet, with the euro under some adjustment," said Kouki Muroi, deputy manager of Aozora Bank's forex trading group. "I think the market will undergo some dollar bargain hunting before retesting lows." The best chance of a dollar rebound in the near term was if the Federal Reserve raised U.S. interest rates by a quarter percentage point to 2 percent, as expected, and signalled that another rise was likely in December, dealers said. Most dealers will scrutinise the Fed's accompanying statement on Wednesday to determine the health of the U.S. economy and the pace of future rate rises. Analysts believe sentiment on the dollar remains bearish owing to deep-seated concerns over the U.S. current account and budget deficits. Raising rates is usually considered bad for stocks, in part because it increases borrowing costs for companies and consumers.
U.S. stocks ended nearly unchanged on Monday and Treasury prices fell as investors awaited the Fed decision. Japanese government bond prices slipped for a third straight session, with the yield on the benchmark 10-year bond <0#JPTSY=JBTC> up 1.5 basis points at 1.545 percent. Spot gold was at $433.75 an ounce, versus $432.35/433.10 an ounce in New York.///www.reuters.com