Yen's slide halts, China data spurs stocks

Tue Apr 9, 2013 8:34am EDT
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By Richard Hubbard

LONDON (Reuters) - A sell-off in the yen ran out of steam on Tuesday as it neared 100 to the dollar, while a fall in Chinese inflation and a solid start to the U.S. corporate earnings season helped shares and commodities.

The Japanese currency reached 99.67 to the dollar before the sell-off stalled, the greenback's strongest level against the yen since May 2009. The euro peaked at 129.94 yen, its highest since January 2010.

Most market players expect yen selling to resume but said it may have to wait until currency options close to the 100 mark expire. This should end the current demand from banks to buy the yen and sell dollars to protect their exposure. <FRX/>

Analysts believe it is only a matter of time before this happens and the dollar sails past the 100 yen mark.

"It looks inevitable, and I'd say (it will break 100) within the next month, if not sooner," said Alpesh Patel, a founding principal at asset manager Praefinium Partners.

The dollar selling on Tuesday left the greenback down 0.4 percent at 98.92 yen, while the euro was also off 0.15 percent on the day at 129.05 yen. <FRX/>

The U.S. currency has still gained around 7 percent against the yen since the Bank of Japan (BOJ) unveiled a massive stimulus program last Thursday involving large purchases of long-term Japanese government bonds (JGBs).

The BOJ's bold measures have had a major impact on the world's main debt markets, sending Japanese government yields down sharply and spurring a search for higher-yielding assets, which has seen yields fall on U.S. and euro zone bonds.   Continued...

Pedestrians holding umbrellas stand in front of a stock index board showing various stock prices outside a brokerage in Tokyo April 3, 2013. REUTERS/Yuya Shino