Reuters: US Dollar Report: GLOBAL MARKETS-Asian shares inch up, euro zone and Fed QE3 eyed

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GLOBAL MARKETS-Asian shares inch up, euro zone and Fed QE3 eyed Sep 10th 2012, 00:35 Sun Sep 9, 2012 8:35pm EDT * MSCI Asia ex-Japan inches up 0.2 pct, Nikkei opens down 0.2 pct * Euro hovers near 4-month high vs dollar * Weak US jobs lift expectations for more Fed stimulus this week By Chikako Mogi TOKYO, Sept 10 (Reuters) - Asian shares crept up on Monday with expectations rising that weak U.S. jobs data would prompt the Federal Reserve to announce fresh stimulus this week and Europe to make use of this week's key events to push forward its debt crisis management. China's industrial output slowed in August while a double-digit rise in fixed asset investment showed that infrastructure spending remained key to economic growth. But rising consumer inflation in August suggested that room to ease monetary policy to shore up growth may be narrowing. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.22 percent, after climbing nearly 2.2 percent for its biggest daily gain in six weeks on Friday. Japan's Nikkei average opened down 0.2 percent. U.S. nonfarm payrolls grew by 96,000 jobs in August, sharply below the 125,000 forecast, and the jobless rate fell to 8.1 percent from July's 8.3 percent, although the fall largely reflected a drop in the participation rate. The jobs data increased bets for the Fed to announce another round of bond buying known or quantitative easing (QE) at its Sept. 12-13 policy meeting, lifting gold prices to six-month highs. The dollar index against key currencies fell to four-month lows, while driving down U.S. Treasury yields on Friday. But views of analysts and economists remained divided over whether the Fed would see the job growth as sufficiently sluggish to spur an aggressive easing such as QE. "Unsatisfactory economic conditions and a failure to meet its (full employment) mandate suggest that the FOMC is set to act soon. At a minimum, we expect the FOMC to extend its forward guidance on rates at next week's meeting, although there is a strong likelihood it will deliver even more," Amber Rabinov at ANZ Research said in a note. The dollar index hovered near its four-month lows on Monday and the dollar traded at 78.24 yen, not far off a five-week trough around 78.02 plumbed on Friday. Spot gold eased 0.1 percent to $1,735 an ounce, slipping from Friday's peak of $1,741.30, its highest since Feb. 29. EVENTFUL WEEK FOR EUROPE The euro eased 0.1 percent to $1.2790, after rallying more than 1 percent on Friday to a four-month high of $1.2815. Markets surged broadly after the European Central Bank agreed last week to launch a new and potentially unlimited bond-buying programme, focused on short-dated bonds in countries implementing approved fiscal austerity measures. The International Monetary Fund strongly backed the ECB's plan, saying it was ready to get involved in designing and monitoring its implementation, while European Commissioner for Economic and Monetary Affairs Olli Rehn said the move is a major step towards stabilising markets. ECB executive board member Benoit Coeure said countries that apply for the bond-buying scheme will not necessarily be asked to make more cuts. "Although ECB president Draghi's bond-purchase program may not be a direct solution to Europe's high debt/low growth problem, it buys invaluable time for national governments to pursue their austerity policies by keeping yields in check and equities supported," said Ashraf Laidi, chief global strategist at City Index, said in a note. Key events for Europe this week include a Sept. 12 ruling by Germany's constitutional court on the new euro zone bailout fund. Financial market prices suggest investors expect the court to back the fund, which would pave the way for aiding countries faced with high borrowing costs such as Spain. Madrid intends to discuss conditions attached to the ECB's bond-buying plan with euro zone finance ministers this week. An European Union finance ministers meeting is set for Sept. 14-15. Global lenders, returning to Athens to assess Greece's austerity reforms before granting its latest bailout which is crucial in keeping the country afloat, have rejected parts of a nearly 12-billion-euro package prepared by the government. German Chancellor Angela Merkel had reached the view that Greece must not be allowed to leave the euro zone in the autumn and is prepared to grant Athens more flexibility over its bailout payments, der Spiegel magazine wrote on Saturday. Link this Share this Digg this Email Reprints

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