Japanese and South Korean stocks soared on Tuesday after strong results from Motorola Inc spurred Wall Street to 2003 highs, but most Asian stocks erased early gains and the dollar rose against the euro and the yen.
The U.S. unit jumped to a one-week high versus the euro and rose against major currencies, helped by Wall Street's rally and extending gains after the European Central Bank chief said a Group of Seven (G7) call last month for exchange rate flexibility was not aimed at the European currency.
Japan's Nikkei average surged over two percent to break the 11,000 barrier, driven by big banks such as Sumitomo Mitsui Financial Group.
But MSCI's broadest index of Asia Pacific shares ex-Japan lost some steam to shed 0.78 percent, after earlier chalking up a three-year high for the 11th day running.
Motorola, the world's second-largest mobile phone maker, posted on Monday a quarterly profit twice the estimates of analysts and forecast stronger-than-expected sales in its current fourth quarter, sending U.S. stocks soaring.
The Dow rose 0.93 percent at 9,764.38 and the Standard & Poor's 500 Index gained 0.7 percent at 1,045.35 -- their highest closes since June 2002. The Nasdaq ended at its highest close since January last year at 1,933.53.
ECB President Wim Duisenberg's attempt on Monday to clarify why the dollar has fallen so far against the euro seemed to make thin currency markets dispel dollar-bearish sentiment, for now.
The G7 call for flexibility was viewed as a demand that Japan and China stop market intervention to weaken their currencies to boost their export markets, an issue that could be raised by President Bush during his Asia trip this week. Intervention by South Korea and Taiwan has also drawn criticism.
Some analysts said Duisenberg's remarks opened an opportunity to adjust positions after the euro rose last week to within a cent of its record high of $1.1932 earlier this year. Others said the recent dollar-selling sentiment had not changed.
"I don't think what Duisenberg said was anything new. The market's position was tilted toward the euro and so I think the fall was an adjustment," said Junya Tanase, foreign exchange strategist at JP Morgan Chase.
On Tuesday morning the euro fell more than one U.S. cent to a one-week low of $1.1606 versus 1.1712/16 in late U.S. trade, when it also fell almost one percent. As of 2:23 a.m. EDT, the euro was trading at $1.1604/09. It dipped to around 126.83 yen compared with 127.45.
The dollar rose to 109.36 yen, about a quarter of a percent above 108.90/00 in late U.S. trade, and more than one yen above a three-year low of 108.28 yen on Friday.
HOPES FOR ECONOMY
Japan's benchmark index shed some gains to close up 1.67 percent at a one-month high of 10,966.43, while the broad TOPIX index ended up 1.25 percent at 1,087.31, its highest close since June last year.
Traders said the market was beginning to erect resistance to the yen's recent strength, seeing it as a sign of an improving economy and foreign inflows into Japan.
"Barring a surge in the yen to around 105 or higher, the market seems willing to ignore yen strength for now," said Masayoshi Okamoto, head of dealing at Jujiya Securities. "Banks continue to rally, which reflects strong hopes for the economy."
The Bank of Japan also upgraded its assessment of the economy for the second straight month in a report on Tuesday, supporting recent signs of a nascent recovery.
Analysts also said Japanese technology issues, mostly exposed to the yen's moves, have underperformed since September and could rise.
Samsung Electronics Co Ltd and exporters such as Hyundai Motor Co drove South Korea's benchmark index up 1.25 to end at a one-month high of 766.52.
But Hong Kong's benchmark index slipped in afternoon trade after failing to hold above the key 12,000-point mark on investor concerns the market had overheated after surging 40 percent in nearly six months.
Motorola's results earlier pushed up Singapore technology, but the benchmark index pulled back from 18-month highs to dip 0.8 percent.
Taiwan stocks also erased gains to end 0.57 percent lower at 5,938.42, down from a 17-month high, as tech shares such as United Microelectronics Corp fell as investors cautiously awaited third-quarter results at home and in the U.S.
Focus would be on Intel Corp's third-quarter earnings later on Tuesday, with analysts hoping that the world's largest chip maker would post revenue growth as the semiconductor sector rebounded from its worst slump.
Japanese government bond prices fell sharply, under pressure from the Nikkei's brief rise above 11,000 and gained little from a monetary easing by the Bank of Japan late last week.
Oil prices dipped to intraday lows with NYMEX November futures down 15 cents to $31.80 a barrel, but traders said OPEC output cuts and tightening heating fuel supplies gave support.
Gold opened slightly lower in Europe at $373.20 on the dollar recovery.
The U.S. unit jumped to a one-week high versus the euro and rose against major currencies, helped by Wall Street's rally and extending gains after the European Central Bank chief said a Group of Seven (G7) call last month for exchange rate flexibility was not aimed at the European currency.
Japan's Nikkei average surged over two percent to break the 11,000 barrier, driven by big banks such as Sumitomo Mitsui Financial Group.
But MSCI's broadest index of Asia Pacific shares ex-Japan lost some steam to shed 0.78 percent, after earlier chalking up a three-year high for the 11th day running.
Motorola, the world's second-largest mobile phone maker, posted on Monday a quarterly profit twice the estimates of analysts and forecast stronger-than-expected sales in its current fourth quarter, sending U.S. stocks soaring.
The Dow rose 0.93 percent at 9,764.38 and the Standard & Poor's 500 Index gained 0.7 percent at 1,045.35 -- their highest closes since June 2002. The Nasdaq ended at its highest close since January last year at 1,933.53.
ECB President Wim Duisenberg's attempt on Monday to clarify why the dollar has fallen so far against the euro seemed to make thin currency markets dispel dollar-bearish sentiment, for now.
The G7 call for flexibility was viewed as a demand that Japan and China stop market intervention to weaken their currencies to boost their export markets, an issue that could be raised by President Bush during his Asia trip this week. Intervention by South Korea and Taiwan has also drawn criticism.
Some analysts said Duisenberg's remarks opened an opportunity to adjust positions after the euro rose last week to within a cent of its record high of $1.1932 earlier this year. Others said the recent dollar-selling sentiment had not changed.
"I don't think what Duisenberg said was anything new. The market's position was tilted toward the euro and so I think the fall was an adjustment," said Junya Tanase, foreign exchange strategist at JP Morgan Chase.
On Tuesday morning the euro fell more than one U.S. cent to a one-week low of $1.1606 versus 1.1712/16 in late U.S. trade, when it also fell almost one percent. As of 2:23 a.m. EDT, the euro was trading at $1.1604/09. It dipped to around 126.83 yen compared with 127.45.
The dollar rose to 109.36 yen, about a quarter of a percent above 108.90/00 in late U.S. trade, and more than one yen above a three-year low of 108.28 yen on Friday.
HOPES FOR ECONOMY
Japan's benchmark index shed some gains to close up 1.67 percent at a one-month high of 10,966.43, while the broad TOPIX index ended up 1.25 percent at 1,087.31, its highest close since June last year.
Traders said the market was beginning to erect resistance to the yen's recent strength, seeing it as a sign of an improving economy and foreign inflows into Japan.
"Barring a surge in the yen to around 105 or higher, the market seems willing to ignore yen strength for now," said Masayoshi Okamoto, head of dealing at Jujiya Securities. "Banks continue to rally, which reflects strong hopes for the economy."
The Bank of Japan also upgraded its assessment of the economy for the second straight month in a report on Tuesday, supporting recent signs of a nascent recovery.
Analysts also said Japanese technology issues, mostly exposed to the yen's moves, have underperformed since September and could rise.
Samsung Electronics Co Ltd and exporters such as Hyundai Motor Co drove South Korea's benchmark index up 1.25 to end at a one-month high of 766.52.
But Hong Kong's benchmark index slipped in afternoon trade after failing to hold above the key 12,000-point mark on investor concerns the market had overheated after surging 40 percent in nearly six months.
Motorola's results earlier pushed up Singapore technology, but the benchmark index pulled back from 18-month highs to dip 0.8 percent.
Taiwan stocks also erased gains to end 0.57 percent lower at 5,938.42, down from a 17-month high, as tech shares such as United Microelectronics Corp fell as investors cautiously awaited third-quarter results at home and in the U.S.
Focus would be on Intel Corp's third-quarter earnings later on Tuesday, with analysts hoping that the world's largest chip maker would post revenue growth as the semiconductor sector rebounded from its worst slump.
Japanese government bond prices fell sharply, under pressure from the Nikkei's brief rise above 11,000 and gained little from a monetary easing by the Bank of Japan late last week.
Oil prices dipped to intraday lows with NYMEX November futures down 15 cents to $31.80 a barrel, but traders said OPEC output cuts and tightening heating fuel supplies gave support.
Gold opened slightly lower in Europe at $373.20 on the dollar recovery.
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