Japan : Asian shares near 9-month peak, dollar shines

TOKYO Asian shares held near nine-month highs on Monday as worries over the impact of Britain’s Brexit vote eased amid efforts to maintain growth, while the dollar was buoyed by a run of solid U.S. economic data.

Policy makers from the Group of 20 countries agreed to work to support global growth and better share the benefits of trade, in a weekend meeting dominated by the impact of Britain’s exit from Europe and fears of rising protectionism.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.1 percent to stand just below its nine-month peak hit on Thursday. Japan’s Nikkei .N225 rose 0.4 percent.

U.S. stock prices marked four straight weeks of gains last week, supported by renewed strength in the tech and telecom sectors and a stronger-than-expected report on manufacturing.

The S&P 500 .SPX set another record closing high on Friday.

“At the moment, U.S. markets are attracting global funds. Globally there remain risks, such as European financial institutions or the Chinese yuan,” said Koichi Yoshikawa, executive director of finance at Standard Chartered Bank in Tokyo.

“We have to see if investors are ready to diversify to other markets than the U.S. in coming weeks,” he added.

The strength of U.S. economic data in recent weeks has revived speculation that the Federal Reserve may raise interest rates around the end of year.

Dollar interest rates futures, which had priced out any chance of a rate hike this in the days that followed the UK referendum, are now pricing in about a 40 percent chance of a 0.25 percentage point increase by the end of year.

That is boosting the relative attraction of the dollar in the currency market.

The dollar’s index against a basket of six major currencies .DXY =USD hit a 4-1/2-month high of 97.543 on Friday and stood at 97.426 in early Monday trade.

As the dollar gains, the euro has been put on back foot, trading at $ 1.0970. The single currency hit a one-month low of $ 1.09555 on Friday.

The British pound is also under pressure after surveys showed on Friday business activity had wilted in the wake of the Brexit vote.

The pound traded at $ 1.3141, near last week’s low of $ 1.3065.

The yen traded at 106.23 per dollar , off last week’s six-week low of 107.49.

The yen showed limited response to comments from Bank of Japan Governor Haruhiko Kuroda on the sidelines of the G20 meeting.

Kuroda said he would ease policy further if necessary to achieve its 2 percent inflation goal, but also said there was no discussion on “helicopter money” – a radical policy of expanding fiscal stimulus financed by printing money.

Oil prices hovered near 2-1/2-month lows after having lost about 4 percent last week on renewed worries about a global crude glut.

Brent crude futures LCOc1 traded at $ 45.83 per barrel, near Friday’s low of $ 45.17, its lowest since May 11.