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Stocks subdued, yen flat

Hong Kong, September 3, 2007

Asian stock markets took a breather, but the underlying tone was positive after the US president and Federal Reserve chairman both talked about tackling a credit problem that had roiled financial markets.

The yen was little changed against the dollar and euro with the US Labour Day holiday set to dampen trade, while oil prices held on to most of last week's gains on worries about supply disruption as a powerful hurricane churned through the Caribbean Sea.

 "Concerns about the US housing sector have been reduced though it will still take some more time for investors to get a clear view of the extent of the problems,' said Kim Joong-hyun, an analyst at Goodmorning Shinhan Securities in South Korea.
 
US President George W Bush announced proposals intended to prevent homeowners from defaulting on risky mortgages, while Fed chief Ben Bernanke said the Fed will take necessary steps to shelter the economy from turmoil in financial markets.

  'The remarks by Bernanke appeared to hint that the Fed will cut interest rates,' said Hiroichi Nishi, general manager of the equity division of Nikko Cordial Securities.
 
 'But many investors want to see economic indicators for August due out later this month for clues to how the US economy is going, leading to a wait-and-see mood.'

By 0051 GMT, MSCI's measure of Asia Pacific stocks excluding Japan had edged up 0.3 per cent, extending last week's 3.8 per cent rise, but Tokyo's Nikkei eased 0.2 after powering up 2.6 per cent on Friday.

The MSCI index is now about 18 per cent above a five-month trough plumbed on Aug 17, but still 6.4 per cent below its July 24 record high.

Investors took profits on some of last Friday's strong performers, knocking Samsung Electronics down 1.4 per cent and Japanese casual wear retailer Fast Retailing down 1.3 per cent.

But Hyundai Motor climbed 2.3 per cent on expectations unionised workers will agree on a wage deal with management, while Australia's construction firm Leighton Holdings jumped 7.3 per cent after buying a stake in Dubai-based Al Habtoor Engineering to expand in the lucrative Gulf market.

Caution ahead of key US data due this week as well as whether the European Central Bank will raise rates at a meeting on Thursday kept the currency market subdued.

The euro bought 157.73 yen and $1.3628, while the dollar fetched 115.73 yen, little changed from late New York levels, but off Friday's peak.

 'There was some disappointment that Bernanke was not clearer in signalling that the Fed will lower rates on Sept 18,' said currency strategist at RBC Capital Markets in a note to clients.

Safe-haven Japanese government bonds (JGBs) stayed under pressure after Friday's fall, with the yield on the 10-year JGB climbing a further 2-½   basis points to two-week high of 1.63 per cent.

Among commodity prices, spot gold held above $671 an ounce after last week's rally, while US crude eased 8 cents to $73.96 a barrel, but clung on to most of last week's gains.Reuters




Tags: Leighton Holdings | Al Habtoor Engineering |

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