Libyan violence takes yen down

Asia

The yen and Swiss franc rose against most of their major counterparts as continuing violence in Libya has driven energy prices higher and stocks lower, spurring demand for safe-haven currencies.



The Swiss franc has increased suddenly to a record high as loyalists of Libyan leader Muammar Qaddafi sought to crush dissent in Tripoli. The euro rose to the strongest in three weeks against the dollar on speculation the European Central Bank will increase the interest rates before the Federal Reserve. Australia’s dollar advanced for the second day after reports showed business investment rose in the final three months of 2010 and an index of leading indicators increased in December.



"The situation in the Mideast and Libya appears to be deteriorating," said Tsunemasa Tsukada, chief manager for currencies and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest financial group by market value. "Investors are probably reducing risk right now, with money likely to go into the yen and the Swiss franc."



Australia & New Zealand

The currency strengthened versus all 16 major counterparts as the data spurred traders to add to bets the central bank will boost the interest rates in the next 12 months. New Zealand’s currency traded near its lowest since October against the yen on speculation its central bank will cut the benchmark rate next month after an earthquake likely dented growth.



"The Aussie bounced off the back of the capital expenditure numbers," said Anthony Gray, head of foreign- exchange dealing in Sydney at Travelex Global Business Payments, a currency-exchange network. "A bit of risk is coming back into the market and Aussie looks like it still has room to go up toward resistance levels around the highs earlier this month."



Australia’s currency rose to $1.0080 as of 3:24 p.m. in Sydney from $1.0022 in New York yesterday after reaching as high as $1.02 on Feb. 4, the most since Jan. 3. The Aussie traded at 82.81 yen from 82.70 and increased 0.3 percent to NZ$1.3467.



Capital spending in Australia advanced 1.3 percent from the previous three months to A$29.7 billion ($29.8 billion), the highest on record, the statistics bureau said in today. Investment in new plant and equipment, a contributor to gross domestic product, gained 6.1 percent last quarter, the biggest advance in year.



commodities

oil:

SYDNEY: Unrest in Libya and the threat contagion to other oil producers in the region kept U.S. crude near $100 a barrel in Asia on Thursday, fuelling fears that global growth may suffer and keeping stocks under pressure.



But there were some signs that investors may be starting to return with base metal prices such as copper bouncing off one-month lows.

U.S. crude last traded at around $99.08 a barrel, having hit $100 a barrel for time since October 2008. Brent crude rose 90 cents to $112.15 a barrel, remaining at highs not seen since late 2008.

Gold

London: Gold fluctuated near a seven week high in London on Wednesday on concern that tensions in Libya and the Middle East and faster inflation will boost demand for the metal as an alternative investment Libyan leader Muammar Qaddafi, in a television address on Tuesday, vowed to fight a growing rebellion until his "last drop of blood".



The dollar declines against the euro on speculation rising fuel costs will put further pressure on European Central Bank policy makers to the greenback and traded within 2% of the record. Gold "will continue to be boosted by geopolitical factors, inflation threats, and from a return of investment, "Tom Pawlicki, an analyst at MF Global in Chicago, said in a report.



Still, prices "have progressed to overbought levels," which may pressure the metal, he said. Immediate-delivery bullion climbed $2.38, or 0.2%, to $1,401.50 an ounce by 10:47 am in London. Prices on Tuesday rose to $1,410.75, the highest level since January 4, and on Wednesday swung between a gain of 0.3% and a loss of 0.2%. The metal for April delivery was little changed at $1,400.70 on the Comex in New York.



Bonds

MUMBAI: Indian federal bond yields inched up in early trades on Thursday on the back of rising global crude prices which raised concerns about sustained domestic inflationary pressures and ahead of the weekly price data.



* At 9:57 a.m., the yield on the most-traded 8.13 percent 2022 bond edged up 2 basis point to 8.12 percent and the second most-traded 8.08 percent 2022 bond edged up 1 basis point 8.14 percent, respectively.



* The illiquid benchmark 10-year bond yield was steady at 8.05 percent.



* Traders said surging world oil prices would be a concern as India imports more than two-thirds of its oil consumption.





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