GLOBAL MARKETS-Dollar see-saws, Tokyo stocks spurt

www.forbes.com Reuters, 02.03.03, 1:52 AM ET By Raju Gopalakrishnan

SINGAPORE, Feb 3 (Reuters) - Speculation about the new Bank of Japan governor briefly took the dollar to a six-week high against the yen on Monday and Tokyo stocks closed almost two percent higher while much of the rest of Asia remained on holiday. With no major new development on the Iraq crisis, economic factors were driving most markets. However, prices were kept in check because the threat of war had not receded. The dollar reached a high of about 120.30 yen on speculation that policy dove Nobuyuki Nakahara would be chosen as the new central bank governor. Nakahara has advocated aggressive credit easing by the central bank, promoting a weaker yen. But the greenback fell back to 120.12 yen after Prime Minister Junichiro Koizumi denied the reports. U.S. Treasuries, which would gain from a rise in the dollar, were softer in Asia because of war concerns, however. Oil prices slipped as Venezuelan oil exports continued to recover, while OPEC ministers warned of a possible glut in supplies in the second quarter. U.S. light crude for March delivery traded 30 cents lower at $33.21 a barrel but the threat of war in Iraq, the world's eighth-biggest oil exporter, continued to keep prices well supported. "War is still very much on the cards and that is likely to counter any downward pressure on prices from Venezuela coming back to work," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney. Spot gold <XAU=> was last quoted at $371.50 per ounce, ticking higher on the threat of war and sending spot platinum to a 23-year high of about $682 per ounce. Markets were closed in China, Hong Kong, Singapore, Malaysia and Taiwan for Chinese New Year. In Tokyo, Japanese stocks opened subdued but ticked up as the yen weakened, raising prospects for exporters. At the close the Nikkei <.N225> was 1.93 percent higher at 8,500.79 points, off a high of 8,511.87 points. Analysts said that the destruction of the space shuttle Columbia was unlikely to have much of an impact on Wall Street and that that had also helped sentiment somewhat. "People were not sure how to assess the incident. But now that Globex (Nasdaq futures <0#ND:>) showed a strong footing, we can say that Wall Street will take it in its stride," said Kazunori Jinnai, general manager at Daiwa Securities SMBC's equity department. In Australia, stocks were pegged back by war jitters. The benchmark S&P/ASX 200 index <.AXJO> eased 0.5 percent to 2,942.6 points by the close. "There's no reason to step up at this stage, with uncertainty hanging over the market," said Ruppen Margarian, equities dealer at ING Investment Management. "People are waiting for a raft of reporting, we've got some economics out this week and, most importantly, (U.S. Secretary of State Colin) Powell going to the U.N.," Margarian said. Powell has promised to present evidence of Iraq's weapons programme to the U.N. Security Council on February 5 as the United States and Britain lobby world leaders for a final U.N. resolution on disarming Iraq. The United States was also due to announce manufacturing data later on Monday and key jobs data on Friday.