* MSCI Asia ex-Japan pauses, but set for biggest weekly gain
since Jan. 6
* Yen jittery before G20, Nikkei drops on BOJ successor
speculation
* Gold hits 6-week low, copper facing largest weekly loss
this year
* European shares likely pause
By Chikako Mogi
TOKYO, Feb 15 (Reuters) – Weak euro zone growth data
dampened sentiment in markets from Asian shares to copper to
gold, while the yen was jittery as the G20’s Moscow meeting gets
underway and speculation builds over candidates to be the next
Bank of Japan governor.
Japanese shares extended losses and by far underperformed
Asian equities on news that a conservative, former finance
ministry bureaucrat is the leading candidate to head the Bank of
Japan, which faces heightening market expectations of and
political pressure to take dramatic steps to reflate Japan’s
economy.
The absence of Chinese investors, major buyers of
commodities such as copper and gold, sapped trading incentives
and capped prices as markets in China and Taiwan remained shut
for the Lunar New Year holiday.
“The recent rally in global stocks shows investors are
chasing after risk assets and the risk-on sentiment has been
turned on, capping assets which are not favoured under these
circumstances, such as gold,” said Yuichi Ikemizu, branch
manager for Standard Bank in Tokyo .
“The G20’s impact on markets, if any, will come through
reactions in currency markets. There will be more incentive next
week when Chinese investors, big buyers, return,” Ikemizu said.
The MSCI’s broadest index of Asia-Pacific shares outside
Japan traded in a wafer-thin range, rising 0.1
percent and falling 0.1 percent. It briefly hit a fresh
18-1/2-month high earlier in the session.
The index, however, was set for a weekly gain of 1.3 percent
for its best such performance since the week to Jan. 6. Receding
risks from the euro zone debt crisis and evidence that global
growth remains on a recovery trend, even if fragile, have
generally underpinned risk assets broadly despite day-to-day
gyrations.
Stocks in the Philippines and Indonesia
hovered near records hit the day before while Australian and
South Korea shares consolidated from their recent strong gains.
Australian shares ended flat after touching a 4-1/2
year high on Thursday, compounded by weak euro zone data and a
$3 billion annual loss from miner Rio Tinto Ltd. South
Korean shares also ended nearly flat after Thursday’s
three-week closing high on the back of a firmer yen.
The Nikkei stock average closed down 1.2 percent.
European markets will likely pause, with financial
spreadbetters predicting London’s FTSE 100, Paris’s
CAC-40 and Frankfurt’s DAX would open little
changed. U.S. stock futures were down 0.2 percent to
suggest a softer Wall Street start.
BOJ CHOICE EYED
The yen firmed against other major currencies as investors
cut back yen short positions amid speculation that Japan might
be singled out because of the yen’s steady drop over the past
three months.
Many traders and analysts say currencies will be discussed,
but yen weakness is unlikely to top the agenda so long as Japan
convinces delegates it is pursuing strong monetary easing to
reflate the economy, and yen devaluation is a side-effect.
Discussions on drafting a Group of 20 communique are proving
“difficult” but the passage on currencies will not single out
Japan’s expansionist policies, a Russian official said on
Friday.
“The prevailing sense from all of the official commentary on
currencies this week is that the international community is
willing to tolerate a weaker yen so long as Japan continues to
focus on domestic policies and probably moderates its rhetoric
on the currency,” JPMorgan said in a note.
The yen’s depreciation has been largely based on
expectations for much bolder easing steps to be taken by the new
BOJ regime starting next month, and news that Japanese Prime
Minister Shinzo Abe is close to selecting his nominee for BOJ
governor. News that Toshiro Muto was seen as the leading
candidate was taken negatively by Japanese stock market.
“Muto is considered to only follow traditional ways such as
expanding asset purchase programs. It would merely be an
‘enhanced version of the conventional way’,” said Norihiro
Fujito, senior investment strategist at Mitsubishi UFJ Morgan
Stanley Securities.
The dollar fell 0.3 percent to 92.54 yen. It marked
its highest since May 2010 of 94.465 on Monday. The euro
also eased 0.3 percent to 123.59 yen, after scaling
its peak since April 2010 of 127.71 yen last week.
London copper was flat but set to log its largest
weekly loss this year.
Spot gold fell to a six-week low below $1,630 an
ounce.
The euro steadied around $1.3356 after falling to a
three-week low of $1.3315 on Thursday as a report showed the
17-nation euro zone economy shrank by 0.6 percent in the last
three months of 2012. The bloc’s two largest economies, Germany
and France, also contracted by more than expected.
With Japanese stocks rising on the yen’s weakness, Japanese
mutual funds saw the biggest monthly net inflow in 21 months in
January as retail investors poured into money reserve funds
after locking in profits from rising domestic stocks and equity
funds, the Investment Trusts Association said on Thursday.
U.S. crude steadied around $97.27 a barrel and Brent
edged down 0.1 percent to $117.86.
