(Updates prices, adds Hong Kong stock market, Treasuries)
By Jason Subler
SINGAPORE, June 4 (Reuters) - The dollar held onto big
overnight gains on Wednesday and oil prices remained 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. []
Analysts said the comments suggested the Fed was unlikely
to cut interest rates further from 2 percent, and may look to
hike borrowing costs later this year.
"It was extraordinary for the Fed to make a specific
comment on the dollar, even in the context of inflationary
risks," said Toshihiko Sakai, a manager of forex trading at
Mitsubishi UFJ Trust Bank in Tokyo.
The dollar generally held steady in early trade on
Wednesday, trading around 105.13 yen <JPY=> and $1.5458 to the
euro <EUR=>.
The stronger dollar helped push down the price of oil and
other commodities. U.S. crude <CLc1> was flat on Wednesday at
$124.36 a barrel after having fallen more than $3 the day
before. Spot gold <XAU=> fell to around $880.00/881.20 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.
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.
Japan's Nikkei share average <> was up 1.2 percent,
led by exporters like Sony Corp <6758.T> on the softer yen.
Honda Motor Co Ltd <7267.T> jumped around 8 percent after it
reported double-digit growth in U.S. sales in May.
[]
The MSCI index of shares in the Asia-Pacific region outside
Japan <.MIAPJ0000PUS> was up 0.1 percent, while a pan-Asian
index <.MIAS00000PUS> was up 0.7 percent.
The Korea Composite Stock Price Index <> was up 0.6
percent, as the easing in oil prices helped auto makers and
airlines such as Hyundai Motor <005380.KS> and Korean Air Line
<003490.KS>.
Bucking the trend were the Hong Kong and Shanghai
exchanges, which both saw the shares of Chinese telecoms firms
fall on worries over plans for industry restructuring. The
Shanghai Composite Index <> was down 2.6 percent, while
the Hang Seng Index <> fell 0.2 percent.
BONDS PULL BACK
Bernanke's comments brought into focus expectations that
the Fed will stop in its cycle of lowering interest rates,
helping send U.S. Treasuries down on Wednesday.
The yield on the 10-year note <US10YT=RR>, which moves in
the opposite direction to the price, rose to 3.923 percent, up
3 basis points from late New York trade.
Japanese government bond futures fell after matching their
biggest daily gain in five years on Tuesday, as investors took
profits on the sharp rise.
June 10-year JGB futures <2JGBv1> fell 0.65 point to
134.70, after Tuesday's 1.43 point rise. The benchmark 10-year
yield <JP10YT=RR> rose 4 basis points to 1.780 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 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 $0.9567 at 0451 GMT, up from
$0.9495 before the data was released.
(Additional reporting by Chikako Mogi and Satomi Noguchi in
Tokyo; Editing by Lincoln Feast)
