Reuters: US Dollar Report: GLOBAL MARKETS-Asian shares steady in range, wary before US election

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GLOBAL MARKETS-Asian shares steady in range, wary before US election Nov 6th 2012, 00:19 Mon Nov 5, 2012 7:19pm EST * MSCI Asia ex-Japan steady, Nikkei opens down 0.2 pct * Dollar index near two-month high as safe-haven sought By Chikako Mogi TOKYO, Nov 6 (Reuters) - Asian shares steadied on Tuesday with investor risk appetite curbed by uncertainty over the outcome of Tuesday's tight U.S. presidential election and renewed doubts over Greece's political ability to push fiscal reforms. European shares, U.S. Treasury yields and the euro fell on Monday, with U.S. stocks advancing only modestly in one of the year's quietest sessions. Risk-aversion underpinned the dollar, after it hit a two-month high against a basket of major currencies of 80.843 on Monday. The euro remained depressed at $1.2798, near Monday's two-month low of $1.2767. "The main focus is the U.S. election, and uncertainty ahead of that is going to keep markets, including Japanese stocks, in a range," said Kenichi Hirano, operating officer at Tachibana Securities. "Everyone is talking about the likely impact of the outcome, but except for a short-term immediate reaction, no matter who wins, it's going to take him a long time to put his policies in place," he said. The MSCI index of Asia-Pacific shares outside Japan nudged up 0.1 percent, with Australian shares up 0.1 percent and South Korean shares opening 0.2 percent higher. Japan's Nikkei average opened down 0.2 percent. U.S. President Barack Obama and Republican challenger Mitt Romney are essentially tied, but the Democrat has a slight edge in some of the pivotal states where the election will be decided, according to Reuters/Ipsos polling. If the election is too close to call in a number of states and the result is delayed, it could roil markets as it did in the protracted 2000 election battle. Analysts have said Obama's re-election is perceived as negative for equities, while markets see Romney as stock-friendly. Implications from the outcome of the election may differ by asset class, but markets broadly will be faced with the risk of higher volatility due to difficult negotiations over a "fiscal cliff," the $600 billion worth of tax hikes and spending cuts set to kick in next year, which threatens the U.S. economy. In addition to the U.S. election, investors need to be mindful of the potential for renewed stress in Europe and China's political leadership transition, Morgan Stanley said. "Markets are currently beset opposing (positive and negative) factors, with the weight of upcoming risk events now turning us decidedly more cautious ... Risks of a messy negotiation around the fiscal cliff are likely to increase volatility at minimum," it said in a research note. China's ruling Communist Party will unveil its new top leadership team as the Chinese congress convenes on Nov. 8, and expectations for stimulus from the new administration look to be unfounded, given the timeline of the prolonged political transition that ends in first quarter 2013, Morgan Stanley said. For Asia this session, investors will eye whether the Reserve Bank of Australia's will announce an interest rate cut at its decision due at 0330 GMT. Market views are divided. U.S. crude futures were up 0.2 percent at $85.78 a barrel. GREECE RAISES FEARS The world's leading economies gave themselves a bit more wiggle room on Monday to meet targets for cutting budget deficits rather than risk worsening a slowdown in many countries, chief among them the United States. Protesters took to the streets over the Greek government's latest belt-tightening proposals ahead of a vote by lawmakers on the plan on Wednesday, which is needed to secure more aid and stave off bankruptcy. The bailout deal to keep near-bankrupt Greece afloat is unlikely to be struck next week when euro zone finance ministers meet in Brussels, a senior EU official said on Monday, as the euro zone still had to find a formula to make Greek debt sustainable and that several countries, including Germany, had to discuss the matter with their parliaments. Greek woes bolstered safe-haven bids for German two-year government bond, sending the yields below zero for the first time in two months on Monday, while benchmark 10-year U.S. Treasury yields fell to 1.684 percent. George Davis, chief technical analyst at RBC Dominion Securities Inc, in a research note said risk appetite could deteriorate further if the Standard & Poor's 500 stock index closed below support at 1,396, Spain's 10-year yields closed above 5.84 percent and the euro ended below $1.2748 after the election. U.S. Treasury yields closing below 1.69 percent on Monday could amplify risk concerns, he said. Link this Share this Digg this Email Reprints

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