* Dlr/yen off 8-mth low as Japan finmin changes tone on yen
* Asia-Pacific stocks down; outperform Nikkei's 2.5 pct
fall
* Dollar index gains on safe-haven buying, bond yields drop
* Oil and gold both retreat
By Eric Burroughs
HONG KONG, Sept 28 (Reuters) - The yen surged to an
eight-month high against the dollar on Monday as Japanese
officials waved off any plans to stem the currency's rise,
driving the Nikkei down 2.5 percent and sparking a broad
retreat from riskier assets.
The yen later gave up some gains as Finance Minister
Hirohisa Fujii changed gears on his comments during the course
of the day, saying yen gains were becoming one-sided just hours
after saying the rise was "not abnormal." []
European shares looked set for a third straight session of
losses, with futures on the Dow Jones Euro Stoxx 50 <STXEc1>
down 0.3 percent.
Other Asian equity markets also retreated, but losses were
smaller than those in Japan and portfolio manager selling
before the third-quarter wraps up also played a role.
Commodities slid and the dollar got a broad safe-haven boost
despite its dip against the Japanese currency.
While Fujii appeared to tone down his comments, analysts
and traders said the consistent message was that Japan was
taking a hands-off approach and is no longer as trigger-happy
as it once was on forex market intervention, having spent about
$400 billion selling yen to protect its fragile economic
recovery in 2003 and 2004. []
The yen's jump against the dollar has it poised to make a
run at the 13-year peak of 87.10 struck earlier in the year,
with the rise through levels that Japan's big exporters had
planned for this financial year hitting their shares.
"There is little caution towards the government
intervention at the moment because Japanese authorities say
they are not thinking about taking action," said Hideki
Hayashi, global economist at Mizuho Securities in Tokyo.
"In the longer term, the dollar could resume its slide
against the yen if data, such as U.S. jobs later this week,
point to a subdued recovery.
The dollar fell as far as 88.23 yen <JPY=> on trading
platform EBS before trimming losses to 89.33 yen, down 0.3
percent on the day. The yen staged broad gains, with the euro
down 1 percent at 130.45 yen <EURJPY=R> and sterling shedding
1.2 percent to 141.35 yen <GBPJPY=R>.
The Nikkei share average <> shed 2.5 percent to hit a
two-month low and briefly fell below the 10,000 line. Among
exporters, Honda Motors <7267.T> fell nearly 5 percent and
electronic parts maker Kyocera Corp <6971.T> lost 3.4 percent
-- among the biggest drags on the index.
The MSCI benchmark of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> fell 1.2 percent, while the Thomson Reuters
index for regional shares <.TRXFLDAXPU> shed 1.3 percent.
Hong Kong's Hang Seng index <> fell 1.9 percent, with
South Korea's KOSPI index <> down 0.9 percent and Taiwan's
TAIEX <> off 0.8 percent.
Some foreign investors were also pulling funds out of Asian
stock markets before quarter-end, partially reversing some of
the heavy buying that has taken place over the past six months
on bets favouring the region's growth prospects.
Foreign investors were stock sellers for a third
consecutive session in South Korea on Monday.
"Without strong buying by foreign investors, markets are
turning lower, and weaker-than-expected U.S. economic data are
weighing on sentiment," said Choi Seong-lak, a market analyst
at SK Securities in Seoul.
Weaker-than-expected U.S. housing sales and durable goods
orders on Friday pushed the U.S. S&P 500 index <.SPX> down 0.6
percent on Friday. S&P futures <SPc1> were down 0.2 percent in
Asia trade. []
Commodity prices also came under pressure, with investors
shrugging off the outcome of the Group of 20 summit in
Pittsburgh and Iran's saber-rattling. []
U.S. crude oil shed 43 cents to $65.59 <CLc1>, extending
last week's 8.4 percent slide after data showing a build-up of
U.S. inventories raised worries about the strength of demand.
Gold prices dipped $2.45 to $988.50 <XAU=>, partly as the
dollar staged a broad rebound despite its losses against the
yen.
The dollar index, a gauge of its performance against six
major currencies, was up 0.6 percent at 77.040 <.DXY>. The euro
slid 0.8 percent to $1.4580 <EUR=>.
The drop in equities propped up government bonds. The
benchmark 10-year Japanese government bond yield <JP10YTN=JBTC>
fell 3 basis points to 1.285 percent, the lowest in nearly
three months. The U.S. 10-year Treasury note <US10YT=RR> dipped
2 basis points to 3.307 percent.
(Additional reporting by Rika Otsuka in Tokyo and Jungyoun
Park in Seoul)
(Editing by Kim Coghill)
