* Dollar holds gains, edges up to highest since Oct
* Euro weighed down by sovereign debt worries
* Japan stocks rise; China, HK down on China bank reserves
* Silver, gold firmer on Wednesday, but off record highs
By Daniel Magnowski
SINGAPORE, Nov 10 (Reuters) - The U.S. dollar rose
marginally on Wednesday to hit its highest levels since late
October against a basket of major currencies as the euro
extended its losses over worries about euro zone sovereign
debt.
Leading European shares <> fell 0.4 percent in early
trade, in step with main Asian markets and Wall Street, after
touching 2-year highs in the previous session, while gold and
silver inched up again after pulling back from record highs
reached on Tuesday.
The dollar's strength boosted exporters in Japan, helping
to push the Nikkei average up to a four-month high, but stock
markets in Hong Kong and China fell after China raised bank
reserve requirements. The move by China's central bank fuelled
worries authorities there may further try to cool the growth on
which the world economy depends.
The dollar gained as U.S. Treasury bond yields rose, with
the impact of the currency move felt across asset classes. The
dollar index <.DXY> rose as high as 77.88, a level it last
touched in late October.
"The dollar has gained some traction," said Mitul Kotecha,
global head of FX strategy at Credit Agricole CIB in Hong Kong.
"It seems like a credible bounce back. I don't see it going too
far but it shows you how short the market was."
The market will look closely at an auction for long-dated
Treasury bonds later on Wednesday, which could give clues to
the greenback's direction, traders said.
The euro <EUR=> fell around 1 percent to $1.3775, with
concerns about the cost of protection against Irish and
Portuguese government debt continuing to weigh on sentiment.
Currency tensions are high on the agenda at this week's G20
summit of advanced and developing economies.
A planning meeting in Seoul on Tuesday on key issues,
including exchange rates, ended inconclusively. Another session
is scheduled for Wednesday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China raises bank reserve requirements []
Charting China's stimulus http://r.reuters.com/guz53q
G20 official fight over currencies []
G20 needs balanced growth system-Obama []
G20 battle lines http://r.reuters.com/jux34q
Basel III; reshaping the rules
http://r.reuters.com/zys68p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Asian stocks, which followed Wall Street to fall for a
second day, set a bearish tone for European markets. The MSCI
index of Asian shares outside of Japan <.MIAPJ0000PUS> fell 0.7
percent.
However, the dollar boosted Japan's Nikkei average <>
as exporters were among the chief beneficiaries of the
currency's rise. The Nikkei firmed 1.4 percent to close at
9,830.5 after trading earlier as high as 9,842, its highest
level since June.
Japanese banks also pushed the Nikkei higher on hopes they
would not be the main focus of global regulators because of
their domestic focus. Mizuho Financial Group <8411.T> soared
7.6 percent.
Japan's stock market has struggled to break decisively
through 9,800 point level, but traders said a clear move beyond
resistance at 9,807 may signal the start of a more sustained
rally.
"The July peak had formed resistance for the Nikkei, and if
it manages to end the day above the level, more gains will
clearly be in order," said Koichi Nosaka, a market analyst at
Securities Japan, Inc.
The firmer dollar weighed on dollar-denominated
commodities.
Gold <XAU=> traded around $1,400 per ounce, a slight uptick
after losing $30 from the record high of $1,424.10 on Tuesday.
Spot silver <XAG=>, which hit a record of $30 per ounce on
Tuesday, also partially recovered from a selloff, trading
around $27.50 per ounce.
U.S. crude futures <CLc1> slipped 21 cents to $86.51 per
barrel, backing off a two-year high on Tuesday.
(Editing by Miral Fahmy)
