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

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.