Asian shares slip, copper tumbles as terror worry takes toll; STI down 1%

Pedestrians walking past a share prices board in Tokyo on Nov 17.
Pedestrians walking past a share prices board in Tokyo on Nov 17. PHOTO: AFP

TOKYO (REUTERS) - An index of Asian shares fell on Wednesday (Nov 18) as copper prices tumbled and another bomb scare in Europe and gunfire in the French capital hurt risk appetite, while bets that the Federal Reserve remains on track for a rate hike underpinned the dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped about 0.2 per cent.

Singapore's Straits Times Index was down 0.98 per cent at 2,888.23 as of 2:38 pm.

Shanghai shares was 0.1 per cent lower but off earlier session lows after data showing Chinese home prices rose for first time in over a year in October on an annual basis. That signalled stabilisation in the housing market, which could help re-energise the listless economy.

Japan's Nikkei bucked the downtrend, adding about 0.1 per cent as the yen shrugged off its traditional status as a safe-haven currency and was lower for most of the session.

Spreadbetters expected the weakness to carry over into European trade, with Britain's FTSE 100 expected to open down by 0.3 per cent, while Germany's DAX and France's CAC were seen down as much as 0.7 per cent.

"The rally in US equity markets that followed on from European markets strong lead this week was stopped dead in its tracks last night, on reports of a multiple bomb threat in Hannover, with the result that the Germany versus Holland game was cancelled," Michael Hewson at CMC Markets in London said in a note to clients.

Wall Street shares ceded earlier gains to end almost flat after news that German authorities called off the soccer match which German Chancellor Angel Merkel was due to attend, sparking fears of another attack coming only days after the deadly assault in Paris.

Then gunfire erupted in a north Paris suburb early on Wednesday as special police forces launched an operation to catch one of the suspects believed to be behind gun and bomb attacks in which 129 people were killed last week, a police source told Reuters.

Separate Air France flights to Paris from the United States were diverted as a security precaution late on Tuesday, which also weighed on sentiment.

The greenback struck a fresh seven-month high against a basket of currencies earlier in the session after US economic data reinforced expectations that the US central bank will increase interest rates next month for the first time in nearly a decade.

The US dollar edged lower late in the Asian day, though its strength for most of the session undermined dollar-denominated commodities, making them more expensive for holders of other currencies.

Copper continued to suffer, shedding 1 per cent to US$4,637.50 a tonne after hitting a 6-1/2-year low of US$4,590 overnight, amid fears of waning demand from China.

In contrast with the Fed's expected course of action, the Bank of Japan is expected to hold steady at its two-day policy meeting that began on Wednesday.

"We're seeing very encouraging signs today, especially the dollar's strength against the yen and the aggressive gains we're seeing in some cyclical stocks, particularly those with US exposure," said Stefan Worrall, cash equities manager at Credit Suisse in Tokyo.

US Treasuries bounced back on safety bids overnight, with the 10-year yield slipping from day's high of 2.313 per cent. It stood at 2.262 per cent in Asian trade, not far from its US close of 2.261 per cent.

The lower yields failed to dampen enthusiasm for the dollar as investors focused on Tuesday's US economic data that affirmed a solid economic picture, supporting the case for the Federal Reserve to raise interest rates in December.

US consumer prices increased in October from the previous month after two straight months of declines, putting annual core inflation at 1.9 per cent.

Industrial output fell short of market expectations but the output in the manufacturing sector posted a solid increase.

The dollar index was flat at 99.620, after hitting a high of 99.756, within sight of its 12-year peak of 100.39 set in March.

Against the yen, the dollar edged down about 0.1 per cent to 123.28 yen, but still within sight of a 2-1/2-month high of 123.60 yen hit on Nov. 9.

The euro was steady US$1.0645, not far from Tuesday's seven-month low of US$1.0630, as the common currency continues to be undermined by expectations that the European Central Bank will take fresh monetary easing steps next month.

Gold hit a 5-1/2-year low of US$1,064.95 per ounce as the strong dollar offset its traditional safe-haven appeal. It last stood at US$1,070.15, down slightly.

Oil prices rebounded a tad after data showed an unexpected stockpile draw for last week, though they remained not far from 6-1/2-year lows hit in August on persistent concerns about a global supply glut.

US crude futures were up about 0.8 per cent at US$40.99 per barrel, moving off Tuesday's low of US$40.58, while Brent last stood at US$43.92, up about 0.8 per cent but less than US$2 away from its August low of US$42.23.