Dollar dips after Bernanke comments

The Fed was sticking to a pledge to keep rates at exceptionally low levels for an 8220;extended period,8221; Bernanke said.

Asian shares weakened as investors were both relieved that the United States was not about to accelerate an upturn in the global interest rate cycle,but concerned about the outlook for the world8217;s biggest economy and Asia8217;s leading export market.

Japan8217;s Nikkei slid 0.5 per cent after hitting a six-week closing high on Monday,as investors took profits on shares of exporters and as trading house stocks lost ground after metal prices fell on Monday.

8220;The selling is a combination of the slightly stronger yen and the speed with which the Nikkei rose over the last six days,making it only natural for the market to take a bit of a breather today,8221; said Takashi Ushio,head of the investment strategy division at Marusan Securities in Tokyo.

Markets were little fazed by news that the government had finalized a 7.2 trillion yen 80.6 billion stimulus package,slightly more than its original plan.

The government also said it was closely watching exchange rate movements as the yen edged up to 89.05 to the dollar from 89.53 late in New York trade.

A lackluster performance by Wall Street also made Asian investors cautious as the Dow Jones gave up early gains after Bernanke8217;s comments and ended flat.

US President Barack Obama is due to lay out proposals to combat double-digit unemployment at a speech scheduled for 11:25 a.m. EST,although they are unlikely to move markets,analysts said.

The MSCI index of Asia Pacific stocks traded outside Japan was down 0.3 per cent while the Thomson Reuters index of regional shares was unchanged.

Hong Kong8217;s Hang Seng Index fell 0.8 per cent but banking giant HSBC Holdings dropped 1.5 per cent ahead of a meeting between debt-laden Dubai World and its key creditors,including HSBC,on Tuesday.

The meeting will discuss the Middle East conglomerate8217;s request to delay payment on 26 billion in debt,which has shaken global markets in the past few weeks.

GOLD REBOUNDS

Gold rebounded to 1,163 an ounce from 1,157 at the New York close as the dollar lost ground,while oil prices were steady at 74 a barrel after sliding 2 per cent on Monday.

Asian currencies,hurt overnight along with other riskier currencies by news that Standard amp; Poor8217;s had put Greece on negative credit watch,rebounded as the dollar slipped on receding US rate rise expectations.

The Australian dollar bounced back to 0.9162 from an overnight low of 0.9054.

8220;It is back to the status quo,8221; said Richard Grace,chief currency strategist at Commonwealth Bank of Australia in Sydney.

8220;This means US yields are likely to stay fairly unattractive for some period and that should give a boost to currencies like the Aussie.8221;

The Korean won,however,weakened against the dollar as investors remained wary of possible intervention by the authorities.