* Yen gains as Asian stocks fall, dollar slips
* Higher yielders fall vs yen
* White House to reappoint Bernanke as Fed chief on Tuesday
By Charlotte Cooper
TOKYO, Aug 25 (Reuters) - The yen headed higher on Tuesday as
share markets fell and investor interest in higher-yielding
currencies ebbed, while currencies took in their stride news that
Federal Reserve chief Ben Bernanke would be reappointed.
A U.S. administration official said President Barack Obama
would reappoint Bernanke for a second term as Fed chairman on
Tuesday. []
The dollar showed little reaction to the news as market
participants had thought there was a good chance Bernanke would
be given a second term to reassure financial markets as they
recover from the global economic crisis, analysts said.
[]
"I don't think there will be any major impact, but it should
be positive for markets such as the stock and bond markets in the
sense that an element of uncertainty has been removed," said
Takahide Nagasaki, chief FX strategist at Daiwa Securities SMBC.
Currencies are still watching share markets for a guide to
investor appetite in riskier assets.
Asian stocks fell broadly after a lacklustre day on Wall
Street, with Tokyo shares dipping 0.7 percent <> and MSCI's
measure of Asian equities excluding Japan slipping 0.8 percent
<.MIAPJ0000PUS>.
Shanghai's share index fell 4 percent <> after Chinese
Premier Wen Jiabao said China would keep monetary policy loose as
the economy faces fresh difficulties. []
The low-yielding yen tends to gain when stocks and
higher-yielding currencies fall or when weak economic data
highlights a long and uncertain road for global recovery.
"The lack of upward momentum in equities and risky currencies
may reflect a degree of fatigue and simply a lot of the good news
is in the price," said a trader at a European bank in Tokyo.
"It is pretty clear monetary policy will be supportive with
little risk of genuine policy tightening for some time in the
major economies."
The dollar fell 0.7 percent on the day to 93.96 yen <JPY=>,
though it remained above last week's one-month low at 93.42.
Dealers noted the spread between the three-month dollar
<USD3MFSR=> and yen <JPY3MFSR=> London interbank offered rates
had inverted for the first time in 16 years, with the dollar
interbank rate dropping to a fresh record low of 0.38688 percent
on Monday and the yen rate standing at 0.38875 percent.
A trader said the Libor rates were not affecting dollar/yen
as such but the pair were sensitive to rate changes because both
had official rates close to zero.
Another trader, for a Japanese bank, said the impact of the
three-month Libor inversion on dollar/yen was limited partly
because interest rates on longer-term instruments such as U.S.
Treasuries remained higher than comparable Japanese government
bond yields.
For example, two-year U.S. Treasury yields now yield 1.025
percent <US2YT=RR>, about 78 basis points above two-year JGB
yields <JP2YTN=JBTC>.
The euro fell 0.7 percent to 134.30 yen <EURJPY=R>, and the
Australian dollar dropped 0.8 percent to 78.53 yen <AUDJPY=R>
after climbing to its highest in a week on Monday, just below
80.00 yen.
The Aussie <AUD=D4> also slipped 0.2 percent to $0.8362, but
the New Zealand dollar <NZD=D4> rose 0.1 percent to $0.6850,
holding close to this month's 11-month high at $0.6888.
The euro edged down 0.1 percent to $1.4292 <EUR=>.
The Standard & Poor's Case/Shiller report on U.S. house
prices for June is due for release later, as is a report on U.S.
consumer confidence in August.
Both will be watched for clues about the economic recovery.
The market will also be watching an auction of $42 billion of
two-year U.S. Treasuries, the first of three U.S. Treasury
auctions slated for this week.
Analysts say a tepid response could highlight the
vulnerability of the United States' fiscal position and might be
a drag on the greenback.
(Additional reporting by Masayuki Kitano in TOKYO and Anirban
Nag in SYDNEY; Editing by Chris Gallagher)
