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Sterling soars on Scottish vote, Asian shares tread water

Reuters | Friday, Sep 19, 2014

TOKYO - The British pound rose sharply after early results from the Scottish independence vote reinforced expectations Scotland would remain in the United Kingdom, while Asian shares gave up some of their earlier gains on Wall Street's strength.

Sterling was last up 0.6 per cent at $1.6496 after rising as high as $1.6525, a marked turnaround from a 10-month low of $1.6051 touched just last week.

The result in the small borough of Clackmannanshire was reported as 46.2 per cent in support of independence, with 53.8 per cent against. Orkney came out as 67.2 per cent against, to just 32.8 per cent for the "Yes" camp.

"It's not final, but the results appear to be leaning toward 'No,' and this indirectly lifted the dollar against the yen," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

Sterling's rise against the yen took the Japanese currency down over two full yen to reach 180.66 yen, its lowest since late 2008.

MSCI's broadest index of Asia-Pacific shares outside Japan was narrowly positive, supported by cheer on Wall Street, where both the benchmark S&P 500 and the Dow Jones industrial average set intraday record highs.

Sentiment was also underpinned by news that Alibaba Group Holding priced its IPO at $68 a share, the top end of the expected range, raising $21.8 billion on Thursday in one of the largest-ever stock offerings.

Japan's Nikkei stock average surged 1.5 per cent, getting a tailwind from a weaker currency as the dollar pushed to a new six-year high of 109.46 yen.

The dollar index, which tracks the US unit against a basket of six major peers, stood at 84.331 after it climbed as high as 84.743 on Thursday, its strongest level in more than four years.

The euro edged down to $1.2907 after refreshing a 14-month low on Thursday, when it fell as low as $1.2834.

Risk sentiment was tempered by geopolitical clouds on the horizon. The US Senate on Thursday approved a bill requested by President Barack Obama to train and moderate Syrian rebels fighting Islamic State militants, which now goes to Obama to sign into law.

Obama said the strong bipartisan support showed Americans were united in the fight against Islamic State militants.

"The emergence of the militant group ISIS in Syria and Iraq, and recent increase in efforts to fight it, has ushered in a new era of geopolitical risk" in the Middle East and North Africa, strategists at Barclays wrote in a client note.

"We think the stage seems set for a prolonged period of heightened regional uncertainty, with risks potentially spilling over into global oil markets and other economies and financial markets in the region," they said.

Spot gold shed 0.2 per cent to $1.221.76 an ounce after touching $1,216.01 in the previous session, its lowest since Jan. 2 on speculation about an earlier-than-expected US interest rate hike.

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