Reuters: US Dollar Report: GLOBAL MARKETS-Asian shares rebound from Cyprus bailout scare, vote eyed

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GLOBAL MARKETS-Asian shares rebound from Cyprus bailout scare, vote eyed Mar 19th 2013, 00:33 Mon Mar 18, 2013 8:33pm EDT * MSCI Asia ex-Japan rebounds from 1.5 pct tumble in previous session * Nikkei opens up 1.5 pct By Chikako Mogi TOKYO, March 19 (Reuters) - Asian shares rebounded on Tuesday from the previous session's steep falls, but investors remained wary over a bailout plan for Cyprus which was set for a parliamentary vote later in the day. Confidence was partially restored by news on Monday that the Eurogroup decided to give Cyprus more flexibility over a bank levy which is part of the bailout conditions, after a teleconference of euro zone finance ministers. A Greek finance ministry source said Cyprus would still need to raise 5.8 billion euros from the levy as planned, but could exempt smaller savings accounts from the levy than first planned. The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent after slumping 1.5 percent to its lowest level since Jan. 2 for its steepest one-day fall in two weeks on Monday. Australian shares rose 0.6 percent, partly recovering Monday's 2 percent losses while South Korean shares opened 0.5 percent higher. Japan's Nikkei stock average opened 1.5 percent after shedding 2.7 percent for its biggest one-day percentage drop in 10 months on Monday. "The worry about Cyprus is overdone, as the scenario there is unlikely to spread to bigger euro zone countries. Global markets were due for a correction after last week's long rally," said Lee Young-gon, an analyst at Hana Daetoo Securities. Global stock markets fell on Monday following the euro zone's decision over the weekend on partially funding a bailout of Cyprus by taxing bank deposits, raising fears the measure could set a precedent for future euro zone bailouts, and destabilise its financial system. The declines gave U.S. equities investors the opportunity to take profits after last week's extended rally. Investors also awaited the U.S. Federal Reserve's policy meeting on Tuesday and Wednesday for the Fed's assessment of recent positive U.S. economic indicators and signs it may consider scaling back its very accommodative monetary stance. European shares fell on Monday, slipping further from multi-year highs hit last week, hitting shares in southern European lenders the hardest, while Italian and Spanish bond yields jumped on Monday. Safe-haven German yields hit 2013 lows. The euro hit a three-week low of $1.2882 on Monday but was trading at $1.2944 early on Tuesday in Asia. The dollar held steady around 82.725 against a basket of major currencies, after inching closer on Monday to a seven-month high of 83.166 hit last week. While investors were cautiously watching developments in Cyprus, many remained sceptical of serious contagion from the island state to the broader European system. "The uncertainties and potential fallout from the bailout plan in Cyprus have brought systemic risk back to the table," Morgan Stanley said in a research note, adding the situation could add to funding stress in the near-term. "However, we note the level of stress is significantly lower than in the first half of 2012. This, in combination with still-abundant liquidity, portfolio reallocations into the (emerging market) asset class, and normalizing growth should keep periods of systemic risk short-lived and contained in nature," it said. U.S. crude oil inched up 0.1 percent to $93.81 a barrel. Link this Share this Digg this Email Reprints

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