By Chikako Mogi
TOKYO, Feb 13 (Reuters) - Asian shares outside of Japan rose
on Wednesday, led by South Korean exporters as the yen firmed
amid conflicting interpretations of G7 comments about the
currency's recent weakness.
The MSCI's broadest index of Asia-Pacific shares outside
Japan gained 0.9 percent.
Seoul shares outperformed with a 1.5 percent jump
while Australian shares jumped 0.9 percent after record
first-half earnings from the Commonwealth Bank of Australia
The Nikkei stock average slumped 1.1 percent as the
firming yen prompted investors to take profits on exporters.
China, Taiwan and Hong Kong markets remain closed for the
Lunar New Year holiday.
European markets will be mixed, with financial spreadbetters
predicting London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX would open between a 0.1 percent fall
and a 0.4 percent gain. U.S. stock futures were up 0.1
percent to suggest a somewhat firmer Wall Street open.
Investors continued to seek cues from currency markets
before a meeting of the Group of 20 finance ministers and
central bankers in Moscow on Friday and Saturday, with growing
international tensions over exchange rates.
At the centre of the debate is Japan, where Prime Minister
Shinzo Abe's government has made it clear that it will push for
aggressive policies to beat stubborn deflation through drastic
monetary expansion. Anticipation of much bolder Bank of Japan
monetary policy has sent the yen into a steady decline, helping
boost Japanese stocks to 33-month highs.
'The Japanese stock market may have rallied too strongly on
expectations alone. I don't believe the Japanese government is
manipulating currency rates, but it is maybe time that an
equilibrium point may be sought for the yen's level given that
some other countries may see weaker currencies as beneficial to
their economies,' said Yuuki Sakurai, CEO at Fukoku Capital
Management in Tokyo.
The yen's respite from heavy selling eased concerns for
investors in South Korea.
'The main board's rebound was driven by a break in the yen's
weakness, following signs that the won's strength has abated
somewhat,' said Lim Dong-rak, an analyst at Hanyang Securities
The yen rallied on Tuesday, reversing the previous day's
late selloff against the dollar and euro, after an official with
the Group of Seven said it is worried about excess moves in the
G7 governors and ministers reaffirmed their commitment that
fiscal and monetary policies would not be directed at devaluing
currencies, a statement meant to reassure investors that Tokyo
was not aiming to guide the yen lower with its aggressive
expansion of monetary policy.
'All these comments are merely stating the obvious and are
not to be taken in the context of whether they are endorsing a
weaker yen or not,' said Yuji Saito, director of foreign
exchange at Credit Agricole in Tokyo.
'What is being said is that monetary policy should be used
to achieve domestic objectives and Japan is undertaking
reflationary policies, not manipulating currency rates, and the
result of that is a weak yen. What is asked for from Japan is to
explain its policy clearly at the G20,' Saito said.
The dollar dropped 0.6 percent to 92.95 yen after
marking its highest level since May 2010 of 94.465 on Monday.
The euro tumbled 0.6 percent to 125.01 yen, moving
further away from its highest since April 2010 of 127.71 yen
touched last week.
The BOJ ends a two-day policy meeting on Thursday, with
markets expecting no fresh easing steps this time. But
expectations are running high that further unprecedented
measures will be taken under a new BOJ regime due to start next
month after the terms of current top officials end.
'So far, the yen has been weakening on expectations for a
bold monetary policy, and from now, Japan has to implement
actual policy to justify such expectations,' said Naohiko Baba,
Japan chief economist at Goldman Sachs.
The euro steadied around $1.3450, keeping overnight
gains made after European Central Bank President Mario Draghi
said talk of a currency war was overdone, and that Spain was on
the right track toward economic recovery.
In his annual State of the Union address, U.S. President
Barack Obama proposed on Tuesday to hike the minimum wage by
more than 20 percent, invest $50 billion on crumbling roads and
bridges and spend $15 billion on a construction jobs program in
a bid to boost economic growth.
U.S. crude was up 0.1 percent to $97.60 a barrel and
Brent was steady around $118.61.
Palladium extended gains to a 17-month high as supply
concerns sparked speculative buying, while gold edged up
on demand from jewellers.
(Additional reporting by Joyce Lee in Seoul; Editing by Eric
Meijer & Kim Coghill)
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