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* Gold hits record high amid dollar slide
* Asian stocks edge higher;Japan boosted by weak yen
* Yen extends fall; quantitative easing, intervention loom
By Umesh Desai
HONG KONG, Dec 3 (Reuters) - Gold struck its third straight
peak in as many days on Thursday because of its investor appeal
as a safe asset while Asian stocks advanced as the appetite for
risky assets remained strong despite Wall Street's dip.
The yen extended its fall on increasing market talk that
Japan may step up quantitative easing to battle deflation and
on hopes authorities may intervene to check its recent gains.
Gold surged to a new high of $1,226.10 an ounce, while the
yen <JPY=> extended its losses, falling to 87.77 per dollar, on
speculation Japan could be embarking on another round of
quantitative easing, while the Japanese Prime Minister's
concerns about the currency's rise stoked intervention
expectations.
Asian shares were led by strong gains in Japan and South
Korea with investors buying metals and consumer discretionary
industries while ignoring the broad weakness in U.S. stocks.
"As long as growth continues to be healthy and none of the
major central banks tighten monitory policy, we think the Asian
rally will go further at least in the first half of next year,"
said Khiem Do, head of the Asia multi-asset group at Baring
Asset Management, which oversees $50 billion.
U.S. stock futures <SPc1> were up half a percent pointing
to a firm start on Wall Street, and reversing some of
Wednesday's losses.
European stock index futures also indicated a firm open,
futures for the Eurostoxx 50 <STXEc1>, Germany's DAX <FDXc1>
and France's CAC <FCEc1> gaining 0.6-0.9 percent.
Japan's Nikkei stock average jumped after the yen's fall
boosted exporters and gold's rise propped metal shares, taking
the benchmark further above last week's four-month lows.
YEN'S DOWNWARD SPIRAL
The yen <JPY=> continued on a downward spiral after Prime
Minister Yukio Hatoyama said the recent rise could not be left
alone. There was also rising speculation that authorities could
flood the market with funds when the rest of the world was
weighing a way out of easy monetary policy.
It fell to as low as 87.93 yen per dollar, with stop-loss
sell orders triggered around 87.50. The weakness adds to its
0.9 percent loss in the previous session -- the largest daily
drop in six weeks.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> rose 0.77 percent.
"There is a lot of interest in emerging market equities and
a lot of money is coming out of Europe and the U.S.," said Alex
Boggis, fund manager at Aberdeen Asset Management, which
oversees about $240 billion in investments.
"People have got the message they want growth and
protection against a possible U.S. dollar depreciation."
Leading the rise in Asia were materials shares
<.MIAPJMT00PUS>, which were up 1.07 percent, and the consumer
discretionary sector <.MIAPJCD00PUS>, 1.21 percent higher.
Consumer discretionary, information technology and
materials industries are expecting the highest earnings growth
rates over the next 12 months with companies in Taiwan
expecting the maximum gain, a Thomson Reuters Starmine research
report said.
The report is based on latest estimates from top analysts.
"Cyclicals including technology, property and materials and
consumer discretionary and consumer staples should continue to
do well," said Baring's Khiem Do highlighting his preference
for industries related to technology, resources and consumers.
DOLLAR'S WOES
In Japan, shares of Mitsubishi Motors <7211.T> soared 17.7
percent to 140 yen after a newspaper report that PSA Peugeot
Citroen <PEUP.PA> is in talks to buy a 30 percent to 50 percent
stake in the group, while exporters like Canon <7751.T> were
lifted by the weak yen.
The yen and the dollar fell further after Bank of America
said it would repay $45 billion of taxpayer bailout funds,
boosting investor confidence and trimming safety bids in those
currencies.
Analysts expect the U.S. dollar's long-term weak outlook to
sustain flows into emerging markets such as Asia ex-Japan.
BNP Paribas said it expects Asia to receive $35 billion in
portfolio inflows in 2010, up from $27 billion in 2009, a year
during which stocks have posted gains of nearly 70 percent.
Gold should remain a beneficiary of the weak dollar story
as the mammoth debt burden facing the United States has
investors fleeing to alternative assets.
"Inflation does not look like a great possibility in the
short term but if the U.S. tries to inflate its way out of its
debt issues, then the dollar will weaken and gold will look
better than anything else as a real asset," said Aberdeen's
Boggis.
(Editing by Jan Dahinten)
((umesh.desai@thomsonreuters.com; +852 2843 6935; Reuters
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