Wed Sep 15, 2010 6:36am EDT
Japan FX intervention pushs yen sharply lower, Nikkei up
World stocks, oil and copper slip
By Dominic Lau
LONDON, Sept 15 (Reuters) - The dollar climbed and world stocks were mixed on Wednesday after Japan intervened in foreign exchange markets for the first time in six years to curb the surging yen and protect its fragile economic recovery.
Estimates vary on how much Japan has spent so far in its first intervention in the foreign exchange market since spending 35 trillion ($409 billion) in 2003-2004. Dealers talk about 300-500 billion yen, though some reports put it closer to 100 billion yen. [ID:nTOE68E02W]
The dollar rose 2.5 percent to a 85.17 yen JPY=, close to a session high of 85.53 hit on trading platform EBS after having dropped to a 15-year low of 82.87 yen earlier, and was up 0.7 percent against a basket of major currencies .DXY.
Tokyo stocks .N225 rose 2.3 percent, helped by gains for exporters like Toyota Motor Corp (7203.T), which rose 3.8 percent. But world stocks .MIWD00000PUSoverall were a touch lower.
"I think we're now going to see persistent official buying of dollar/yen in the near-term," said Adam Cole, head of currency strategy at RBC Capital Markets.
"But in the long-term I'm not sure it will be sustained as the current administration is less interventionist than the LDP who were in power during the last bout of intervention in 2004." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Stories on yen strength, intervention [ID:nECONJP] PDF on yen's rise: r.reuters.com/zuz33p Reuters Insider TV-Dlr bounce link.reuters.com/fet63p Graphic on yen strength: r.reuters.com/puw56n Analysis on Japan political risk: r.reuters.com/jyj83n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The intervention also helped send the euro, Australian dollar and sterling sharply higher on the day against the Japanese currency, although traders doubted Tokyo had bought anything other than dollars for yen.
The euro was up 2.4 percent at 110.45 yen EURJPY=.
"Speculators have been long of yen so there is scope for further yen selling. But there's scepticism over whether the Japanese can change the trend as fundamentals haven't altered," Beat Siegenthaler, fx strategist at UBS, said.
The dollar is still down 8.3 percent this year against the yen, which seen by investors as a safe haven from concerns over global growth.
NIKKEI UP, WORLD STOCKS EASE
In Europe, the FTSEurofirst 300 .FTEU3 slipped 0.4 percent, while the Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU eased 1 percent.
"It (the intervention) has not really done much over here," a London-based trader said. "The market has had a very good run over the last few weeks and (investors) are looking for a point to take some profits off."
U.S. stock index futures SPc2 DJc2 NDc2 were flat to down 0.3 percent, indicating a slightly softer opening for Wall Street ahead of the U.S. industrial production data.
Promising retail sales reports on Tuesday added to optimism that the U.S. economic recovery, while slow, is not stalling.
World stocks measured by MSCI All-Country World Index .MIWD00000PUS dipped 0.2 percent after five days of gains. The index, trading at a one-year forward price-to-earnings of 11.23 versus a 10-year average of 15.2, is still down 6.7 percent since Lehman Brothers went bankrupt this day two years ago.
The S&P 500 .SPX is down 10 percent for the same period and crude oil CLc1 down 25 percent.
Oil prices fell 1.5 percent to trade below $76 a barrel on Wednesday, down for the second day, while copper MCU3 slipped 0.8 percent.
Yields on benchmark 10-year U.S. Treasuries US10YT=RR were up 3 basis points at 2.7044 percent, while those on 10-year German Bunds DE10YT=RR were up 1 basis point at 2.388 percent. (Additional reporting by Charlotte Cooper in Tokyo, Nick Macfie in Singapore, Neal Armstrong and Simon Jessop in London, and Blaise Robinson in Paris; editing by Patrick Graham)
From Reuters published on Wed Sep 15, 2010 6:36am EDT