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* Dollar steadies as BOJ meeting weighs on yen
* Asian shares flat after Monday's bounce
* Aussie dlr gains then retreats after c.bank raises rates
By Susan Fenton
HONG KONG, Dec 1 (Reuters) - The dollar recovered early
losses on Tuesday as the yen came under pressure ahead of a
special central bank meeting while Asian shares were steady as
investors paused after Monday's bounce.
In Australia, the Aussie dollar <AUD=> rose then quickly
retreated after the Reserve Bank of Australia raised interest
rates for a third time in as many months, by 25 basis points to
3.75 percent.
The central bank said it would gradually withdraw monetary
stimulus, reducing the likelihood of another rate rise in
February.
The yen <JPY=> drew selling on news the Bank of Japan would
hold a special policy meeting at 0500 GMT and Japanese
government bond futures <2JGBv1> hit a one-year high as the
market expected the BOJ would announce a return to quantitative
easing to support the economy and help tackle deflation.
"Investors are finding it hard to buy the yen further as
the tone of remarks from Japanese authorities has changed
recently," said Kazuyuki Takami, senior manager of foreign
exchange trading at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
Japanese officials have sounded increasingly worried about
the yen's strength, which will hurt exporters and potentially
aggravate deflation.
Japanese shares turned positive on news of the meeting,
with the Nikkei index <> up nearly 2 percent, while the
yen's weakness helped the dollar recover slim early losses and
edge up 0.05 percent against a basket of currencies <.DXY>.
Australian share prices <.AXJ0> were flat after the
interest rate decision and stock markets across the region
outside Japan were also steady as fears about Dubai's debt woes
continued to fade but there were no new developments to push
shares higher after they bounced back on Monday, analysts said.
Dubai World, the holding company at the heart of the Dubai
crisis, on Monday announced a restructuring plan involving $26
billion in debt. However, the Dubai government said it was not
responsible for Dubai World's debts, dealing a blow to
creditors' assumptions that the Arab emirate would guarantee
the government-controlled conglomerate's liabilities
[].
"Dubai is still a risk but most of Asia has very limited
exposure to Dubai other than isolated banks. So people may want
to avoid the banks but most other companies are okay," said
Francis Cheung, an equities strategist at CLSA in Hong Kong.
Singapore's DBS Group <DBSM.SI>, Southeast Asia's top
lender, said it had $1.28 billion exposure to Dubai but its
shares were steady by late morning.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> was up 0.4 percent while the Thomson Reuters
index of regional shares <.TRXFLDAXPU> was down 0.4 percent.
QANTAS JUMPS
Asian markets were encouraged by gains on Wall Street where
the Dow Jones <> edged up 0.3 percent and there was good
news after the closing bell as quarterly profits from retailer
Guess Inc <GES.N> beat expectations and forecast holiday season
earnings would exceed Wall Street estimates. []
Economic data out of Asia, including China purchasing
managers' indexes [][] and a near 20
percent rebound in South Korean exports last month
[], indicated regional recovery was under way but
had largely been factored into share prices.
Shares in Australian carrier Qantas <QAN.AX>, however,
jumped 3.5 percent after the airline announced a 7 percent rise
in October passenger numbers.
The oil price <CLc1> was steady at $77.30 a barrel after
climbing 1.6 percent on Monday on news that Iran had
restructured its naval forces for operations in the event of a
conflict and had detained five Britons after their yacht
strayed into Iranian waters. [][]
Gold <XAU=> dipped slightly to $1,178.45 an ounce, but was
not far off its New York close at $1,179.10.
(Additional reporting by Kaori Kaneko in TOKYO; editing by
Tomasz Janowski)
(susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)
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