* Ex-Japan Asia MSCI down 0.3 pct, Nikkei snaps 9-day
* Dollar off 14-year high but seen supported on Trumponomics
* Yuan off 8 1/2-year low vs dollar
* European shares seen opening 0.1 pct higher
By Hideyuki Sano
TOKYO, Dec 19 Asian shares slipped to four-week
lows on Monday as the prospect of higher U.S. interest rates
and a strong dollar stemming from the incoming Trump
Administration's purported policies of cutting taxes and
spending heavily threatened to suck capital out of emerging
European shares are seen having better luck, following
recent gains in shares of banks, resource companies and some
Spread-betters see a rise of about 0.1 percent in the main
indexes including Britain's FTSE, Germany's DAX
and France's CAC.
MSCI's broadest index of Asia-Pacific shares outside Japan
dipped 0.3 percent to a four-week low. It has
lost 3.7 percent since Trump was elected.
Leading the losses, Hong Kong shares hit a four-month
low as the Hong Kong dollar soared in line with the U.S. dollar
to which it is pegged, and after insurance shares were hit by a
Chinese regulator's warnings..
In addition, investors turned cautious after China's top
leaders vowed over the weekend to stem asset bubbles in 2017 and
place greater importance on the prevention of financial risk
Japan's Nikkei, which has benefited from the yen's
sharp fall against the dollar, snapped its nine-day winning
streak, dipping 0.1 percent from Friday's one-year high.
"I think the markets' trend will continue. Share prices will
edge higher and so will bond yields. The dollar will remain
strong. One key question is whether the Dow Jones will hit the
20,000 mark," said Koichi Yoshikawa, executive director of
financial markets at Standard Chartered Bank in Tokyo.
The Dow Jones industrial average ended down 0.04
percent to 19,843.41 on Friday, while the S&P 500 lost
0.18 percent to 2,258.07.
Financial markets briefly turned "risk-off" in late U.S.
trade on Friday following news that a Chinese Navy warship had
seized a U.S. underwater drone in international waters in the
South China Sea.
The diplomatic incident appears to have been resolved for
now after the two countries said on Saturday that China will
return the drone.
Still, doubts on the future of Sino-U.S. relations with
Trump in the White House could eventually cast a shadow on
financial markets, some market players say.
Trump has previously threatened to declare China a currency
manipulator and force changes in U.S.-Chinese trade policy,
which he described as leading to the theft of American jobs.
He has also questioned a highly-sensitive aspect of
U.S.-China diplomacy, notably whether Washington will continue
to recognise that Taiwan is part of the "One China" line
mandated by Beijing.
"Their relations seem to be getting worse. Towards Trump's
inauguration next month, we could see more volatility in the
yuan," said Kenta Tadaide, senior economist at Mizuho Research.
"If the yuan hits 7 per dollar, that would attract a lot of
attention," he added.
The yuan was little moved in Asia, firming slightly from
Friday's 8 1/2-year low of 6.9616 to the dollar.
Diplomacy aside, many Asian shares have been hit by higher
U.S. rates and a stronger dollar, which was sparked by
expectations that Trump's planned fiscal spending and tax cuts
will fuel growth and inflation.
The 10-year U.S. Treasuries yield stood at 2.584
percent in Asia on Monday, near its two-year high of 2.641
percent touched on Thursday.
As higher U.S. yields shore up the dollar, the dollar's
index against a trade-weighted basket of six major currencies
jumped to a 14-year high of 103.56 last week ,
though it gave up some gains to profit-taking on Monday.
The index last stood at 102.68.
The euro traded at $1.0459, bouncing back from last
week's low of $1.03665, its weakest since January 2003.
The dollar traded at 117.32 yen, down 0.5 percent on
the day and off Thursday's 10-1/2-month high of 118.66.
The Bank of Japan started its two-day policy meeting on
Monday. It is widely expected to hold its policy, including its
twin targets of minus 0.10 percent interest on a part of excess
reserves and the zero percent 10-year government bond yield.
Federal Reserve Chair Janet Yellen will be speaking on "the
State of the Job Market" at 1330 EST/1830 GMT, an opportunity
for market players to gauge her assessment of the U.S. economy.
In Europe, troubled Italian bank Monte dei Paschi di Siena
will offer new shares for sale between Monday and
Thursday in a last-ditch attempt to raise 5 billion euros ($5.2
billion) by the end of the year and avoid a state bailout.
A failure to secure funds would lead to a rescue by the
government, a move that requires private investors to share the
costs of rescue according to new European Union rules.
Oil prices held firm in anticipation of tighter crude supply
going into 2017 following the decision by OPEC and other
producers to cut output.
Brent futures rose 0.5 percent to $55.48 a barrel,
while U.S. West Texas Intermediate crude added 0.7
percent to $52.24 per barrel.
(Reporting by Hideyuki Sano; Editing by Shri Navaratnam and