* Asian equity markets rise, commodities steadier after
fall
* Dollar bounce loses steam as short covering fades
* U.S. Treasury yields off highs
By Ian Chua
SYDNEY, Oct 28 (Reuters) - Asian stocks rebounded on
Thursday after having suffered their biggest one-day fall in
four months, while the yen held firm against a broadly weaker
dollar, taking details of the Bank of Japan's stimulus plan in
its stride.
European shares took their cue from Asia with London's FTSE
100 index <> gaining 0.7 percent at the open and Germany's
DAX <> climbing 0.5 percent. U.S. stock index futures
<SPc1><NDc1><DJc1> were all up between 0.1 and 0.2 percent.
The BOJ said it would meet next week, bringing forward the
Nov. 15-16 policy meeting to speed up the launch of a 5
trillion yen ($61 billion) asset buying plan aimed at helping
the economy cope with a strong yen.
It kept interest rates unchanged near zero as widely
expected. []
"What stands out is that the BOJ rescheduled its next
meeting, bringing it forward, which suggests the central bank
wants to make sure it can take action if needed after the
FOMC," said Takeshi Minami, chief economist at Norinchukin
Research Institute, referring to the U.S. central bank meeting
on Nov. 2-3.
The MSCI index of Asia Pacific stocks outside Japan rose
0.7 percent <.MIAPJ0000PUS>, having slid nearly 2 percent on
Wednesday to post its biggest one-day percentage fall since
late June. Still, it remained close to a 28-month high hit last
week.
Financial markets have been volatile this week as
speculation intensifies over how much the Federal Reserve is
likely to spend to pump up a faltering recovery and whether
such new measures will be carried out swiftly or phased in over
time.
Analysts expect choppy market action to persist in the lead
up to next week's meeting.
Market participants have begun to scale back expectations
of the size of any additional stimulus with The Wall Street
Journal reporting on Wednesday that Fed officials wanted to
avoid a "shock and awe" approach. [].
"I think the Fed is trying to prepare the market for
incremental QE2 and this whole pre-announcement, in a way, is
to cushion the impact if it comes out on November 3rd that it
is only $100 billion rather than $1-$2 trillion," said V.
Anantha-Nageshwaran, CIO of Julius Baer in Hong Kong.
Asian governments are worried about the impact this might
have on their economy. South Korean Finance Minister Yoon
Jeung-hyun said on Thursday the government needs to guard
against a potential asset bubble caused by excessive liquidity.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a survey on size of QE, click [] For
possible FOMC outcomes, click []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Japan's Nikkei stock average <>, which was spared the
selloff seen in the region on Tuesday, slipped 0.2 percent to
end at a six-week low, while Hong Kong's Hang Seng index <>
gained 0.3 percent and Australia's S&P/ASX 200 index <>
rose 0.8 percent.
Among the top performers, shares in Canon Inc <7751.T>
rallied more than 3 percent after the world's largest maker of
digital cameras posted strong quarterly results and raised its
full-year outlook.
In Australia, upbeat earnings helped drive ANZ shares
<ANZ.AX> up about 3 percent, while bourse operator ASX <ASX.AX>
climbed 1.5 percent after two days of sharp losses due to
uncertainty over Singapore Exchange's <SGXL.SI> $7.9 billion
bid.
The MSCI's emerging market stock benchmark <.MSCIEF> rose
0.2 percent.
The selloff in commodities also halted with copper <CMCU3>,
which dropped more than $200 a tonne on Tuesday, its steepest
decline since late June, gaining $30 to $8,330 a tonne.
U.S. light sweet crude oil <CLc1> was little changed at
$82.00 per barrel, while spot gold <XAU=> was also steady near
$1,326.00 an ounce.
DOLLAR SAGS
The U.S. dollar eased against a basket of six major
currencies <.DXY> after two straight days of gains helped the
index climb back into positive territory for 2010.
The euro rose to $1.3833 <EUR=> from $1.3764 late in New
York, while the dollar eased to 81.42 yen <JPY=> from 81.69
yen, hovering not far from a record low of 79.75 yen.
The dollar's decline also coincided with a pullback in U.S.
Treasury yields, which gained sharply in the past few sessions
as the market scaled back expectations of the size of Fed's
likely asset purchase programme.
The U.S. 10-year yield <US10YT=RR> was last at 2.69
percent, down from a one-month high of 2.73 percent set on
Wednesday.
"Overall, we still see the risk for the FOMC next week is
going to be towards U.S. dollar strength once the dust
settles," said Sue Trinh, senior currency strategist at RBC
Capital Markets in Hong Kong.
"Much of the market is pretty much expecting $100 billion
per month for the next six months or so. So we'll need to see
asset purchases in excess of that in order to generate fresh
U.S. dollar weakness."
(Additional reporting by Vikram Subhedar in Hong Kong;
Editing by Nick Macfie)
