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Stocks in Asia near decade highs, euro holds gains

Sydney - Stocks in Asia traded near decade highs, while the euro held gains spurred by Catalonia’s president stepping back from an immediate declaration of independence from Spain.

Japan’s Topix index fluctuated after closing at the highest in 10 years on Tuesday, weighed down in part by a collapse in Kobe Steel.

Stocks were higher in Sydney, Seoul and China. The Dow Jones Industrial Average set a fresh record high, and the largest exchange-traded fund tracking Spanish equities advanced.

The dollar was steady after retreating from recent highs thanks to waning optimism over the Trump administration’s tax-cut plans. Australian bonds rose as the market easily digested a record auction of government debt.

China’s exchange rate is in focus after recent volatility in the yuan spurred some speculation policy makers could widen the trading band. Though mostly a symbolic step, it would add to the impression China remains directed toward giving market demand a greater role.

People’s Bank of China Governor Zhou Xiaochuan this week argued in favour of further reforms in a magazine interview ahead of next week’s Communist Party leadership gathering.

The euro hit the highest level in almost two weeks after Catalan President Carles Puigdemont said that while an October 1 referendum had given him the mandate to pursue independence, he would "suspend" the result for a period of some weeks for dialogue with Prime Minister Mariano Rajoy’s administration.

He suggested that the European Union should be involved in the talks, and sought to reassure companies fleeing the region.

The pound remained about 2 cents higher than its recent lows after UK Prime Minister Theresa May won public support from Brexit hardliners in her cabinet for outlining contingency plans for leaving the European Union without a deal.

Ten-year US Treasury yields were below their recent highs of 2.40%, amid a feud between President Donald Trump and high-ranking Republican Senator Bob Corker that’s put the tax-reform agenda in question.

Trump said he’ll tweak his tax plan within a few weeks and dismissed fears that the dispute with Corker will hurt its chances.

What’s coming up this week:

Minutes from the most recent Federal Reserve meeting are due Wednesday. API and EIA crude data are delayed to Wednesday and Thursday, respectively, because of Monday’s US holiday.

Earnings season begins for major US banks, led by JPMorgan Chase, Citigroup, Bank of America and Wells Fargo & Co. Also reporting will be BlackRock, Domino’s Pizza, Samsung Electronics, German container company Gerresheimer, UK grocery wholesaler Booker Group, and Sky.

The active Atlantic hurricane season will probably figure prominently in US data on retail sales and consumer prices.

Here are the main moves in markets:

Stocks

Japan’s Topix index was little changed as of 2pm in Tokyo, while the Nikkei 225 Stock Average rose 0.3%, poised to close at its highest since 1996. 

Australia’s S&P/ASX 200 Index rose 0.6% and South Korea’s Kospi index added 0.8%.

The Hang Seng Index in Hong Kong was flat, while China’s benchmark was higher. Futures on the S&P 500 Index were flat.

The underlying gauge rose 0.2%. The Dow gained 0.3% to a record. Wal-Mart Stores Inc. surged 4.5% after saying it expects US e-commerce sales to surge 40% in the next fiscal year as its online investments allow the retail giant to play catch-up with Amazon.com.

The iShares MSCI Spain Capped ETF rose 1.6%, with trading volume nearing 700% of the 90-day average on optimism that a deal between Catalonia and Madrid will be reached.

The MSCI Asia Pacific Index was steady near the highest since December 2007, while the MSCI All Country World Index was close to its record high. The MSCI Emerging Market Index rose 1.1% on Tuesday.

Currencies

The Bloomberg Dollar Spot Index was little changed after three days of losses as the offshore yuan fell from a two-week high. The euro was at $1.1814 after climbing 0.6% in the prior session.

The yen was at 112.46 per dollar after gaining 0.2% on Tuesday.

The Turkish lira was little changed. It reversed gains against the dollar on Tuesday amid fresh developments in the strained relations between the US and Turkey. The Aussie bought 77.82 US cents.

Bonds

The yield on 10-year Treasuries held at 2.36%. Australia’s 10-year bond yield was steady at 2.83% after the government sold a record A$3.5bn ($2.7bn) of new bonds maturing in 2022.

Spain’s 10-year yield rose two basis points to 1.70% on Tuesday.

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