Asian shares mostly higher on record Dow, yen slips

Yen slips to fresh lows on speculation over imminent monetary easing, Nikkei adds 0.4% on weak yen

Wall Street's record close overnight bolstered most Asian shares on Tuesday as growing confidence in the US economy underpinned investor risk appetite, while the yen slipped to fresh lows on speculation over imminent monetary easing.

The benchmark Standard & Poor's 500 stock index extended its winning streak to seven sessions and touched its highest intraday level since October 15, 2007 on Monday while the Dow Jones industrial average closed at a record 14447.29.

Reflecting rising risk appetite in the wake of Friday's solid US jobs data, the CBOE Volatility Index or VIX, which is often used as a gauge for risk, ended Monday at the lowest level since February 2007.

The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2%, led by its financials sector with a 0.5% gain.

"It looks as if it's an echo of US trading overnight where the finance sector was the best performing sector," said Michael McCarthy, chief market strategist at CMC Markets.

Australian shares erased earlier gains to inch down 0.1% after hitting a fresh 4-1/2-year high. South Korean shares fell 0.3%.

Hong Kong shares and Shanghai shares each rose 0.5%.

Japan's Nikkei stock average added 0.4% after reaching a fresh 4-1/2-year high, encouraged by the yen's drop which helps boost the earnings of exporters. The Nikkei was on track for a ninth straight day of gains.

Dollar eyes upside

The dollar has benefited from last week's strong US jobs data while the yen remained under pressure from expectations for further easing steps from the Bank of Japan to bring the country out of deflation.

"The latest rise in the dollar/yen stems from US factors, such as improving economic indicators, rising stocks and yields climbing, and 97 yen looks to be in sight," said Koji Fukaya, CEO and currency strategist of FPG Securities in Tokyo.

The dollar/yen may pause in the second quarter, when US economic indicators typically show seasonal weakness, but even so the dollar's downside will be limited to around 92 yen, with a fall below 90 yen becoming increasing less likely, he said.

The dollar rose to 96.71 yen on Tuesday, its highest since August 2009, while the Australian dollar climbed to fresh 4-1/2 year highs on the yen of 99.55 yen, aided by a report the incoming Bank of Japan governor might convene an extraordinary meeting soon after taking office later this month.

The Nikkei news reported Haruhiko Kuroda, the nominee for BOJ governor, may launch new monetary easing steps soon after he takes office next week, rather than waiting for the bank's first regular policy board meeting in early April.

"Dollar/yen was already very bid overnight, consistent with the backup in US Treasury yields. The Nikkei story has just given it a bit of a kick and its certainly adding to yen weakness," said Sue Trinh, senior currency strategist at RBC in Hong Kong.

The euro was trading up 0.2% against the yen at 125.84 yen.

Against the dollar, the common currency was down 0.1% at $1.3031, weighed by worries about Italy's inconclusive elections last month delaying the country's fiscal reform efforts.

Strength in equities weighed on assets typically linked with risk aversion, with the 10-year US Treasury yields pinned near an 11-month high around 2.07% in Asia.

Spot gold edged up 0.2% to $1,582.74 an ounce, caught in a range and capped by a key technical resistance of its 14-day moving average, which stood at $1,583.32 on Tuesday.

US crude was up 0.2% to $92.21 a barrel and Brent crude steadied around $110.20.