*sars* - hit asian stocks, dollar stuck near lowss

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    GLOBAL MARKETS-SARS hits Asian stocks, dollar stuck near lows
    15:23, Wednesday, 17 December 2003

    By Anne Marie Roantree

    SINGAPORE, Dec 17 (Reuters) - A SARS case in Taiwan rattled
    Asian investors on Wednesday, while the dollar hovered near
    record lows on the euro after surprisingly subdued U.S. inflation
    data indicated interest rates would stay low for some time.

    The dollar's weak tone pushed gold higher and saw Japanese
    stocks drop two percent, despite broadly robust U.S. economic
    data that helped send Wall Street to its highest close in nearly
    19 months.

    Taiwan said a SARS researcher at a military hospital had
    tested positive for the deadly virus and had recently visited
    Singapore, sending Taiwan shares <.TWII> down two percent and
    Singapore Airlines down more than 2.5 percent. Hong
    Kong's Cathay Pacific <0293.HK> dropped 2.7 percent.

    "The news renewed fears of the previous SARS virus outbreak,
    which dampened Taiwan's economy," said Maggie Chien, asset
    management consultant at Capital Investment Management.

    Japan's Nikkei <.N225> was down two percent at 10,063.02 at
    0400 GMT, as the yen, which is up more than 10 percent against
    the dollar this year, weighed on exporters.

    Toyota Motor Co <7203.T> fell two percent, while Canon Inc
    <7751.T> dropped more than two percent.

    "The two biggest factors for the dollar's decline in recent
    months have been the U.S. current account deficit and the
    prospect of low interest rates," said Kikuko Takeda, market
    economist at Bank of Tokyo-Mitsubishi. "Yesterday's data
    confirmed that these will continue, giving a green light for
    dollar selling for the time being."

    Shares in South Korea <.KS11> fell 1.1 percent, while Hong
    Kong <.HSI> was down 0.5 percent. An MSCI index of Asia Pacific
    shares outside Japan <.MSCIAPJ> was down 0.7 percent, off a
    three-year high hit on Monday.



    DOLLAR FALTERS

    U.S. data on Tuesday showed consumer prices dropped 0.2
    percent in November, after remaining unchanged in October,
    dragging the underlying inflation rate to its lowest in nearly 38
    years.

    The third-quarter current account deficit shrank more than
    expected but was still running at about five percent of the
    country's gross domestic product, a level many analysts deem as
    unhealthy.

    Robust industrial production and housing starts data
    suggested the U.S. economy was stronger than most analysts had
    thought, but the dollar again failed to take advantage.

    As of 0400 GMT, the dollar, which has been weighed down by
    the ballooning current account deficit and security fears in
    Iraq, stood at 107.50 yen , little changed from late U.S.
    levels and off a three-year low of 106.74 yen hit last week.

    Few players were eager to buy the yen amid fears Japan would
    intervene to protect an export-driven economic recovery.

    The euro hovered around $1.2324 , little changed from
    late U.S. levels. It was about 0.3 percent below its record high
    of $1.2363 set in London trade on Tuesday.

    The strong industrial and house building figures helped the
    Dow Jones Industrial Average <.DJI> rise one percent to its
    highest close since May 2002. The tech-heavy Nasdaq <.IXIC> rose
    0.3 percent.

    U.S. Treasuries firmed in U.S. trade as the drop in the CPI
    trumped the other economic reports to suggest interest rates
    would remain low. The benchmark 10-year note yielded
    4.20 percent in Asian trade.

    U.S. oil was up one cent at $32.90, after slipping in
    New York as investors took profits.

    Gold was quoted at $409.00 an ounce, compared with
    $407.25 in New York.

 
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