Dollar sinks in Asia as Tokyo stocks cool off

TOKYO (AFP) - The dollar extended its losses in Asia on Tuesday, after peaking above 100 yen (S$1.24) in the previous session, as a fall in Tokyo shares led investors to the safety of the Japanese unit.

In early afternoon trade the greenback bought 99.80 yen, down from 99.93 yen Monday in New York. The US unit touched 100.40 yen in Tokyo Monday before suffering a sell-off.

The euro held steady at $1.3508 against $1.3507 in US trade while it slipped to 134.78 yen from 134.97 yen.

Investors are looking for less risky assets after a late sell-off on Wall Street on Monday, a senior dealer at a major bank told Dow Jones Newswires.

While the Dow finished at a record high, it closed below an intraday peak after investment titan Carl Icahn said he was cautious about equity markets, adding they could fall soon.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange was down 0.25 per cent by the close, also succumbing to profit-taking after surging 7.7 per cent over the past week.

Attention will now turn to a speech by outgoing Federal Reserve chief Ben Bernanke later in the day to see if he gives any hints about future policy or when the US central bank will begin winding down its stimulus programme.

Euro trading was focused on the release of the closely watched ZEW German economic institute survey on investor sentiment, which analysts expect to show an improvement.

"With concerns about the level of economic growth in the eurozone and the implications for inflation, better data is always welcome," National Australia Bank said.

The single currency suffered some selling pressure earlier this month after the European Central Bank announced a surprise cut in interest rates to a record low of 0.25 per cent from 0.50 per cent.

The dollar was mostly weaker against other Asia-Pacific currencies.

It slipped to Sg$1.2457 from Sg$1.2464 the previous day, to 62.23 Indian rupees from 62.65 rupees, to 1,055.94 South Korean won from 1,057.90 won, to Tw$29.46 from Tw$29.53, and to 43.57 Philippine pesos from 43.61 pesos.

The greenback edged up to 31.59 Thai baht from 31.56 baht.

The Australian dollar weakened to 93.85 US cents from 94.11 cents, while the Chinese yuan was at 16.36 yen against 16.42 yen.