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SINGAPORE, May 22 (Reuters) Japanese stocks inched higher on Monday, with blue-chip shares tracking gains in U.S. stocks, but U.S.

inflation worries continued to weigh on the broader Asian market.

The dollar edged higher, building on gains made late last week when investors shifted money into U.S. assets out of commodities such as gold and oil. While gold fell on Monday, oil reversed an early dip and crept back towards $69.

Japan's Nikkei share average, which has fallen for two straight weeks, was up around 0.5 percent. In contrast, shares elsewhere in Asia measured by MSCI were down about 0.6 percent.

Susumu Abe, manager at Mito information and investment department in Japan, said bargain hunters had lifted the Tokyo market.

''Investors are buying a slew of undervalued issues, after seeing the Nikkei's resilience after falling briefly below 16,000,'' he said.

The Nikkei hit a two-month closing low of 16,087.18 last Thursday, having lost a total 1,204 points since May 8.

Shares were also up a touch in Taiwan and Singapore, but down approaching 1 percent in Seoul, Hong Kong and Australia.

U.S. stocks rose on Friday, ending a volatile week as gains in tech firms offset a slide in shares of some commodity-related stocks. The Nasdaq Composite Index rose 0.62 percent, while the Dow Jones industrial average rose 0.14 percent.

This week will be ''interesting because we've really now put most of the earnings season behind us,'' said Brock Ganeles, head of equities at Merriman Curhan Ford&Co. in the United States. ''It's easier for macroeconomic factors to impact stocks even more because you're not hearing from companies as much.'' DOLLAR RISE BOOSTS EXPORTERS A rise in the dollar versus the yen helped ease concerns about potential earnings of Japanese exporters, which had been one of the major factors dragging down Honda Motor Co. Ltd. and other auto makers.

Honda, Japan's third-biggest auto maker, was up 3 percent, while bigger rival Toyota Motor Corp., which hit a three-month closing low on Friday, was up 1.8 percent.

Sony Corp. was up around 3.5 percent after a Nihon Keizai business daily report that KDDI Corp., Japan's second-largest telecoms operator, planned to offer Sony's Walkman brand mobile phones in Japan later this year. Sony hit a four-month closing low on Friday.

Traders said the dollar was firm as investors bought the currency back, having sold it heavily over the past couple of weeks, when it hit an eight-month low against the yen and a year-low versus the euro.

''The dollar is likely to be firm this week as investors take a respite from the past weeks' rapid selling and adjust their positions,'' said a dealer at a Japanese bank.

''Market focus is returning to the future course of U.S. interest rates. And whether the dollar keeps its gains will depend on whether we see strong data,'' he said.

The United States is due to report housing, consumer sentiment and revised first-quarter GDP growth figures this week.

At 0215 GMT, the dollar was at 112.10 yen, from around 111.70 yen in late U.S. trade on Friday. The euro was $1.2737 from around $1.2775.

Gold lost some appeal as a rising dollar made the precious metal more expensive in other currencies.

Spot gold hit a high of $661.25 an ounce before retreating to $653.70, down from $659.20/660.00 late in the U.S. market. Gold fell to a three-week low of $651 on Friday.

Oil prices steadied after shedding almost 5 percent last week as investors, spooked by inflation concerns, locked in profits on a broad range of commodities.

At 0217 GMT, U.S. crude was trading 16 cents higher at $68.69 a barrel.

Japanese government bond prices rose, tracking a short-covering rally in longer-dated U.S. Treasuries and European bonds. The yield on the benchmark 10-year bond sank to a three-week low, reversing a rise which had taken it to nearly a seven-year high earlier in the month.

REUTERS CH VA VV1112

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