Global Markets: Asian shares up with eye on fiscal cliff, yen slips more

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Asian shares rose amid caution as US lawmakers prepared to resume talks to avoid a fiscal crunch. (Reuters) Asian shares rose amid caution as US lawmakers prepared to resume talks to avoid a fiscal crunch. (Reuters)
SummaryAsian shares rose amid caution as US lawmakers prepared to resume talks to avoid a fiscal crunch.

on hopes the new Japanese government's policies would spur demand. Brent crude steadied at $111.03. However, South Korea warned on Thursday of only a modest recovery in the economy next year. India's economic growth could get stuck at 5-5.5 percent if a policy logjam continues, said Montek Singh Ahluwalia, a key policy adviser to Prime Minister Manmohan Singh.

YEN SALES ACCELERATE

Against the yen, the dollar at 85.87 yen reached its highest since September 2010, with investors accelerating their yen sales after new Japanese Prime Minister Shinzo Abe said his government would pursue bold monetary policy, flexible fiscal policy and a growth strategy to encourage private investment. Abe has pledged to make his top priority beating deflation and taming the strong yen, which are dragging down the world's third biggest economy.

The yen is on track for a drop of more than 10 percent this year, its steepest since 2005. It also fell to a 16-month low against the euro at 113.65 yen on EBS on Thursday.

The weaker yen, a boon for Japanese exporters, lifted the benchmark Nikkei stock average 0.9 percent to close at its highest since March 2011. It is on track to log its best yearly gain since 2005.

"People are putting on some positions based on what we saw after the cabinet appointment and LDP policy decision," a dealer at a foreign brokerage said, referring to the ruling party.

The yen is expected to stay under pressure given the new government's clear resolve to prevent it rising. Japan's top government spokesman said recent yen declines were a reversal of past "one-sided" gains in the Japanese currency.

"I'm still bullish on the dollar/yen quite a bit," said a trader for a U.S. bank in Singapore. "In this thin market, I think anything can happen. But definitely I wouldn't go against the trend. The trend is quite clear at this point in time."

New Japanese Finance Minister Taro Aso said the prime minister had ordered him to compile a stimulus package without adhering to the previous government's 44 trillion yen ($519 billion) cap on new bond issuance.

The benchmark 10-year Japanese government bond yield rose to three-month highs of 0.80 percent, while lead 10-year JGB futures hit a three-month low of 143.48.

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