Asia stocks track US tech rally

The dollar held firm against major currencies,and hit a 2-month high against the yen.

The dollar held firm on Tuesday against major currencies,and hit a two-month high against the yen,while Asian shares edged up as technology stocks tracked a rally in their peers on Wall Street.

The dollar touched 91.45 yen,its highest level since late October,helped by unwinding of dollar short positions ahead of the year end,and was steady against a basket of major currencies after reaching multi-week highs on Monday.

Recent robust US economic figures are also supporting the dollar,raising expectations that US interest rates may rise sooner than earlier thought.

8220;It does all get back to when the Fed may or may not be tightening policy and the market is heading toward thinking they will get to tightening in Q3 next year,8221; said Greg Gibbs,a currency strategist at RBS in Sydney.

The dollar8217;s strength helped lift shares of Asian exporters,notably in Japan where the Nikkei index hit an eight-week high as exporters were boosted by a weakening yen.

The Nikkei was up 1.2 per cent by late morning.

Gold picked up,trading at 1,093.2 an ounce after hitting a six-and-a-half week low at 1,090.65 on Monday when it was hit by the dollar8217;s rise.

The MSCI index of Asia Pacific stocks traded outside Japan rose 0.6 per cent while the Thomson Reuters index of regional shares was 0.7 per cent higher.

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Asian technology shares tracked a rally on Wall Street after Barclays upgraded chipmaker Intel Corp,which helped push the Nasdaq to a 15-month high. An upgrade for aluminum producer Alcoa Inc and the US healthcare bill8217;s advance in the Senate underpinned overall market sentiment,lifting the Dow Jones by 0.8 per cent.

Stock market gains generally were modest as investors are keen to lock in gains this year,which has seen the MSCI Asia ex-Japan index surge 60 per cent.

Optimism about the sustainability of global economic recovery meanwhile was reinforced by Chicago Federal Reserve Bank President Charles Evans,who forecast the US economy would grow 3 to 3.5 per cent over the next 18 months but low inflation would allow the central bank to maintain easy monetary policy for an extended period.

Currency markets,however,are speculating that the US economy could recover faster than the euro zone and US rates will rise earlier.

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Rising US yields are eating into the Australian dollar8217;s interest rate advantage and pushed it to an 11-week low at 0.8782 at one point on Tuesday.

The dollar8217;s broad strength has also put pressure on the oil price but it was steady on Tuesday at 73.76 a barrel ahead of an OPEC meeting in Angola,when the cartel is expected to leave output limits unchanged. The market was also awaiting US crude inventory data due later in the day.