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By Jason Subler
SINGAPORE, June 4 (Reuters) - The dollar held onto big
overnight gains on Wednesday and oil prices continued to inch
down, giving some support to Asian stocks and helping them
recover from fresh concerns over the impact of the credit
crunch.
The dollar jumped against the euro and other major
currencies on Tuesday after Federal Reserve Chairman Ben
Bernanke gave an unusually explicit warning about the
inflationary threat from a weak U.S. currency. []
"We take this as a meaningful shift in rhetoric," currency
strategists at Morgan Stanley said in a note to clients, adding
that Bernanke's comments could help the dollar recover more.
The dollar generally held steady in early trade on
Wednesday, trading around 105.15 yen <JPY=> and $1.5450 to the
euro <EUR=>.
The stronger dollar helped push down the price of oil and
other commodities. U.S. crude <CLc1> was down 0.3 percent on
Wednesday at $123.95 a barrel after having fallen more than $3
the day before. Spot gold <XAU=> fell to around $878.75/879.95
an ounce from $882.90/884.10 in late New York trade on Tuesday.
The dollar's longer-term weakness has helped drive
commodity prices to record highs by encouraging the purchase of
dollar-denominated commodities as a hedge against inflation.
Japan's Nikkei share average <> was up 1.2 percent,
led by exporters like Sony Corp <6758.T> on the softer yen.
The MSCI index of shares in the Asia-Pacific region outside
Japan <.MIAPJ0000PUS> was up 0.4 percent, while a pan-Asian
index <.MIAS00000PUS> was up 0.9 percent.
The Korea Composite Stock Price Index <> was up 0.4
percent, as the easing in oil prices helped auto makers and
airlines such as Hyundai Motor <005380.KS> and Korean Air Line
Shares rose in the face of continuing jitters over the
vulnerability of the financial sector to the credit crunch, set
off earlier this week when a ratings agency downgraded three
U.S. brokerages and as the Wall Street Journal reported that
Lehman Brothers <LEH.N> may need to raise more capital.
<003490.KS>.
The worries set off by the report on Lehman have been a
boon to government bonds, as investors looked for their
relative stability on the prospect that equities could prove
more risky.
Japanese government bond futures fell on Wednesday after
matching their biggest daily gain the day before, as investors
took profits on the sharp rise.
June 10-year JGB futures <2JGBv1> fell 0.6 point to 134.75,
after Tuesday's 1.43 point rise. The benchmark 10-year yield
<JP10YT=RR> rose 4.5 basis points to 1.784 percent, after
falling sharply the day before.
"There is no new factor to change the big picture as long
as expectations for a recovery in the U.S. economy remain. JGB
yields will likely stay near the upper end of the recent
range," said Yasuhiro Onakado, chief economist at Daiwa SB
Investments.
The euro edged up slightly after dropping to a nearly
three-week low against the dollar on Tuesday, trading at
$1.5444 <EUR=> in early Asian trade on Wednesday.
The Australian dollar rose against the U.S. currency after
gross domestic product data for the first quarter was stronger
than expected, showing seasonally-adjusted quarterly growth of
0.6 percent.
The Aussie <AUD=> was at $0.9555/58 at 0218 GMT, up from
$0.9495 before the data was released.
(Additional reporting by Chikako Mogi and Taiga Uranaka in
Tokyo; Editing by Lincoln Feast)
