Asia Stocks Hit Highs, Dollar Down on US Data

Asian stocks touched record highs and the dollar hit another all-time low against the euro on Wednesday.

Asian stocks touched record highs and the dollar hit another all-time low against the euro on Wednesday after more weak U.S. economic data boosted expectations the Federal Reserve will cut interest rates again next month.

European equities may recover on Wednesday from losses the previous day, with bookmakers tipping small opening gains on Britain's FTSE 100, Germany's DAX and France's CAC 40 amid a steady stream of corporate results.

U.S. figures on Tuesday showed consumer confidence sank unexpectedly to a near two-year low in September, while another report said the pace of existing home sales fell last month.

The data cemented the view that the U.S. central bank will follow up last week's 50 basis point rate cut with more easing to shield the world's biggest economy from a housing slump and financial turbulence.

"You've got the tug of war between disappointing economic news and the hopes of a rate cut. Bad news is seen as good news perversely," said Eric Betts, equities strategist at Nomura Australia. "It suggests a bumpy ride ahead."

The MSCI's broadest index of Asian markets outside Japan gained 0.5 percent to touch another record high and take year-to-date gains above 30 percent, while the Nikkei ended up 0.1 percent.

Australia's benchmark S&P/ASX 200 index ended flat after setting record closing highs for two sessions running.

Taiwan's market, closed on Monday and Tuesday for national holidays, jumped 1.7 percent to its highest close in nearly two months, led by gains in firms such as Taiwan Cement and China Petrochemical amid high raw material prices, while Indian shares rose past 17,000 points for first time. Hong Kong markets were closed for a holiday.

But investors shied away from technology stocks such as Taiwan Semiconductor Manufacturing Co Ltd, the world's top contract chip maker, on concerns over the U.S. economy.

"On the tech front, some investors are pulling back, worried that the year-end peak season will not be as strong as expected due to the U.S. credit crisis," said Cliff Chuang, a manager at Mega International Securities in Taiwan.

U.S. Treasuries inched up in Asia in the wake of the weak U.S. economic data, boosting Japanese government bonds.

Oil prices edged up but held below $80 a barrel as supply concerns have eased with oil and natural gas production in the Gulf of Mexico back up to speed after shutdowns last week.

Gold which usually moves in the opposite direction to the dollar, rose to around $733 an ounce from $731 late in New York on Tuesday.

DOLLAR HANGS LOW

The dollar index against a basket of currencies edged up 0.1 percent, but remained within sight of an all-time low, struggling on the view that more U.S. rate cuts would further erode demand for dollar-denominated assets.

The euro rose to another record high of $1.4163 on electronic trading platform EBS in early Tokyo trade as the dollar extended losses from the previous session after the weak U.S. consumer confidence reading.

The Australian dollar was at $0.8720 against the U.S. currency, up 0.8 percent from late Australian trade on Tuesday. It briefly rose to as high as $0.8748 -- an eight-week high.

"Momentum to sell the dollar remains strong," said Hideaki Inoue, foreign exchange manager at Mitsubishi UFJ Trust and Banking in Tokyo.

Against the yen, the U.S. currency was largely unchanged at 114.78 yen The pair reacted little to data showing Japan's trade surplus nearly quadrupled in August from a year earlier, far exceeding expectations.

Hungry for more hints on the scope of sluggishness in the U.S. economy, investors awaited a weekly reading of the U.S. mortgage market and a report on durable goods orders for August, due later in the day.