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Yen, gold rise on Korea worry, while Asia stocks rebound

Sydney - Geopolitical concerns loomed over some financial markets for a second day, as sabre-rattling over North Korea’s nuclear weapons program sent the yen and gold higher. Asian stocks staged a turnaround.

Japanese and Hong Kong equities reversed early declines, led by gains in automakers and technology companies. The yen climbed with gold for a second day after North Korea’s missile launch fanned concern the country is closer to building a device capable of hitting the US. Oil retreated after climbing for eight straight sessions. US equity and bond markets are set to reopen after the July 4 holiday.

North Korean leader Kim Jong Un’s actions further escalate tensions over his nuclear ambitions and show how efforts to rein him in - from international sanctions to US and Chinese pressure - have not worked. The US. confirmed the rocket launched on July 4 was an intercontinental ballistic missile, with Secretary of State Rex Tillerson calling it a “new escalation of the threat” to the US and its allies that would be brought before the United Nations Security Council.

Markets in the past have shown a capacity to quickly move beyond periods of tension on the Korean peninsula following short bouts of risk aversion. Political turmoil on the Korean peninsula comes ahead of the G-20 summit in Hamburg this week as the United Nations Security Council prepares to host an emergency meeting on Wednesday.

Elsewhere, the Federal Reserve is due to release minutes from its June policy meeting, the latest clues for investors on the path for U.S. interest rates ahead of Friday’s key jobs report. Equity investors this year have put their faith in a global economic recovery, helping spur all-time highs in global stocks, whereas bond buyers appear less sanguine on the outlook, doubting Fed rate-hike plans.

What’s coming up:

American employers probably added around 175 000 workers in June and wage growth probably strengthened, consistent with a solid labour market, economists project the US Labour Department to report on Friday. US President Donald Trump will attend the G-20 summit and is expected to hold his first meeting with Russia’s Vladimir Putin as well as meet his Chinese counterpart Xi Jinping.

These are the main moves in markets:

Currencies

The yen was up 0.2% to 113.11 per dollar as of 13:25 in Tokyo, after climbing as much as 0.6% during Tuesday’s session. The Korean won added 0.2%. China’s offshore yuan rose 0.2%, after falling during the previous two sessions. The Australian dollar was at 76.15 US cents, up 0.1%, after tumbling 0.7% Tuesday in the wake of the Reserve Bank of Australia’s decision to maintain a neutral policy stance. The Bloomberg Dollar Spot Index retreated 0.1%. The British pound and the euro added 0.1%.

Commodities

Gold advanced 0.3% to $1 227.47 an ounce following its 0.3% climb Tuesday.  WTI crude slipped 0.2% to $46.97 a barrel. Oil has rallied more than 10% after falling into a bear market last month.

Stocks

Australia’s S&P/ASX 200 Index fell 0.4% after soaring 1.8% Tuesday. Japan’s Topix index advanced 0.4%, erasing an earlier loss, with Subaru Corp. rallying 3.4% and Toyota Motor jumping 1.4%. South Korea’s Kospi Index rose 0.1% after swinging between gains and losses earlier in the session.  Hong Kong’s Hang Seng climbed 0.4% as Geely Automobile rebounded 1.5%. The Hang Seng China Enterprises Index rose 0.3%. The Shanghai Composite Index rose 0.2%. Futures on the S&P 500 Index were little changed. The gauge rose 0.2% Monday in a shortened session before the July 4 holiday. The Stoxx Europe 600 Index fell 0.3% Tuesday after rallying 1.1% during the previous session.

Bonds

The yield on 10-year Treasuries fell two basis points to 2.33%. The rate rose five basis points Monday, after surging 16 basis points last week. The market was closed Tuesday. Australian 10-year yields rose two basis points to 2.64%, after dropping five basis points in the previous session.

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