World stock markets mixed as dollar falls against yen, yuan, euro

World shares mixed amid weaker dollar

SEOUL, South Korea — World stock markets were mixed Tuesday despite another gain on Wall Street as the dollar retreated to a new 15-year low against the yen and Japan’s prime minister survived a leadership challenge. The Chinese yuan hit another high and the euro also rose.

Japan’s Nikkei 225 stock average fell 0.2 percent to 9,299.31 points. After the market closed, Prime Minister Naoto Kan was re-elected president of the Democratic Party, defeating a challenge by veteran power-broker Ichiro Ozawa.

The victory means Kan, who has been in office three months, will remain in power, providing some continuity for a country that has seen five leadership changes in the past four years, and is dealing with a surging currency and a spat with China over disputed islands.

The dollar touched 83.09 yen, its second 15-year low of the day, after the result was announced before recovering slightly to 83.26 yen in late afternoon trading. The U.S. currency stood at 83.71 yen late Monday in New York.

“Investors were speculating that if Ozawa won, Japan would intervene to boost the dollar,” said Yu Yokoi, a foreign exchange dealer at Mizuho Bank. “But Ozawa lost, and investors quickly reacted to it as the scenario of dollar-supporting intervention is less likely.”

Both Kan and Ozawa have made comments hinting at possible intervention, though Ozawa’s were seen as stronger in tone.

The dollar began faltering overnight in New York where investors sought out riskier bets on signs that growth in China is picking up.

In Tokyo, automakers and tech shares were hit by the yen’s climb, which prompted selling in exporters. The strong yen can erode their foreign-earned income when it is repatriated to Japan.

Toyota Motor Corp. was down 1.7 percent to 2,899 yen and Sony Corp. lost 0.7 percent to 2,494 yen. Toshiba Corp. fell 1.0 percent to 396 yen.

China’s currency, meanwhile, hit a new high against the dollar for the third straight trading day as U.S. lawmakers prepared for hearings on Beijing’s foreign exchange policies.

China’s central bank set the yuan-dollar parity rate at 6.7378 on Tuesday, after putting it at 6.7509 on Monday and 6.7625 on Friday. The yuan closed at 6.7618 on Monday.

By late Tuesday, the yuan was trading at 6.7455 to the dollar, after hitting a low of 6.7446.

In New York Monday, the Dow Jones industrial average added 81.36 points, or 0.8 percent, to finish at 10,544.13, its eighth gain in the past nine sessions. Broader indexes also rose.

That failed to provide much momentum to Asia, however, where gains were limited. Hong Kong’s Hang Seng index managed to advance just 0.2 percent to 21,696.04.

“The rise was blunted by profit-taking,” said Francis Lun, general manager of Fulbright Securities in Hong Kong.

Shanghai’s benchmark stock index eked out a marginal increase of less than 0.1 percent to 2,688.52, while Australia’s rose 0.3 percent to 4,626.50. India’s Sensex, the strongest regional performer, gained 0.8 percent to 19,351.65.

South Korea’s Kospi, meanwhile, fell 0.2 percent to 1,815.25.

In Europe, stocks slumped in early trading.

The FTSE 100 index of leading British shares fell 0.2 percent to 5,553.27. Germany’s DAX declined 0.4 percent to 6,237.09 and France’s CAC-40 retreated 0.2 percent to 3,758.77.

The euro, meanwhile, rose to $1.2889 from $1.2860 in New York on Monday.

U.S. stocks rose after global regulators agreed to new rules for how much money banks must keep in reserves and China reported industrial production rose.

Also fueling investor confidence were a flurry of new takeovers, seen as a sign of corporate optimism.

Hewlett-Packard Co. agreed to purchase security software provider ArcSight Inc. and Dollar Thrifty Automotive Group Inc. said it accepted Hertz Global Holdings Inc.’s acquisition offer.

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Associated Press writers Malcolm Foster, Mari Yamaguchi and Shino Yuasa in Tokyo and Elaine Kurtenbach in Shanghai contributed to this report.

(This version CORRECTS the number of days yuan has risen.)