Asia stocks hit by Syria air strikes

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 By Shinichi Saoshiro

TOKYO (Reuters) – Asian stocks slipped on Wednesday as U.S.-led air strikes in Syria curbed appetite for risky assets, while the dollar was kept in check after U.S. yields fell on geopolitical woes and dovish statements by a Federal Reserve official.

Tracking overnight declines on Wall Street, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent after momentarily touching a fresh four-month low.

Tokyo’s Nikkei shed 0.3 percent.

The United States and its Arab allies bombed militant groups in Syria for the first time on Tuesday, opening a new front amid shifting Middle East alliances.

“If geopolitical concerns deepen, you can’t expect Japanese markets alone to survive. The market could fall up to 10-15 percent at most,” said Akiko Miyazaki, director of stocks at Barclays in Tokyo.

The air strikes in Syria also garnered demand for safe-haven government debt and pushed U.S. Treasury yields lower, in turn helping arrest the dollar’s recent bull run.

The dollar was down 0.2 percent at 108.645 yen, after going as low as 108.25 yen overnight. The greenback has been on the back foot after scaling a six-year high of 109.46 on Friday.

The euro was little changed at $1.2854, limping away from the 14-month low of $1.2816 hit Monday.

Fed officials could offer more catalysts for currency markets, after Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said on Tuesday the central bank can keep stimulating the U.S. economy because inflation is posing little threat – comments the markets perceived as dovish.

Federal Reserve Bank of Cleveland President Loretta Mester speaks later in the day.

“Fed officials will be in focus again today.. .if they do not give any hints that they are in a hurry to hike rates the dollar could lose more ground against the yen and present 109 as a ceiling,” said Masafumi Yamamoto, market strategist for Praevidentia Strategy in Tokyo.

In commodities, Brent crude oil slid, with ample global supplies outweighing tensions in the Middle East for the moment. [O/R]

Brent was down 37 cents at $96.48 a barrel.

Gold dipped as a spike triggered by safe haven bids in the wake of the air strikes in Syria faded. Spot gold was down 0.1 percent at $1,221.60 an ounce.

Copper was stuck near three-year lows, weighed after miner Newmont raised its supply forecast and by signs of fragility in the global economy. [MET/L]

Three-month copper on the London Metal Exchange was nearly flat at $6,719 a tonne after slumping to the lowest in three months on Monday at $6,707.25 a tonne.

(Additional reporting by Hideyuki Sano in Tokyo; Editing by Eric Meijer & Shri Navaratnam)

 

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