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Asia: Stocks fall, US dollar holds losses on Trump ban

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[SYDNEY] Asian equities followed US stocks lower while gold and the yen extended gains on concern that Donald Trump may follow through with isolationist policies. Banks and exporters led declines in Japanese shares before a Bank of Japan policy decision.

Japan's Topix slid after the S&P 500 Index fell the most since the November election as Mr Trump's order on immigration drew a rebuke from some Republican lawmakers. 

The US dollar maintained Monday's losses against most of its peers and gold advanced for a third day, while oil slumped. China, Hong Kong and Vietnam markets will be closed for holidays.

"Trump's isolationist policies mean increasing risks associated with US assets," weighing on the US dollar, said Imre Speizer, a market strategist at Westpac Banking Corp in Wellington.

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The selling of riskier assets represented the biggest market rebuke yet to the new administration's preferences, after US stocks had staged one of the best-ever post-election rallies on speculation Mr Trump's policies would accelerate the economy.

The yen extended gains after Mr Trump fired Sally Yates, the acting attorney general who said she wouldn't allow the Justice Department to defend the president's order banning immigrants from seven predominantly Muslim countries.

The Bank of Japan is expected to leave policy unchanged Tuesday as it concludes its first meeting of 2017. With markets increasingly convinced the central bank is done undertaking additional monetary easing for the foreseeable future, investors will look for hints of possible tightening ahead as the BOJ also releases its latest growth and inflation forecasts.

The Federal Reserve announces a policy decision on Wednesday. Like the BOJ, it is expected to leave lending rates where they are, though the Fed's statement will be parsed for any reading on Trump's impact on the world's largest economy.

Mr Trump plans to announce his nomination to the Supreme Court Tuesday, a move certain to dominate headlines and perhaps delay the presentation of further details on spending policies.

Apple Inc, Facebook Inc and Amazon.com Inc are among the major US companies due to report results this week. Of the S&P 500 names to report so far, 73 per cent have topped profit estimates. Japan will see earnings from companies including Sony Corp. and Honda Motor Co.

Stocks

Japan's Topix slumped 1.2 per cent as of 11:30am in Tokyo, with banks and exporters leading declines for a second day. NEC Corp tumbled 15 per cent after cutting its full-year profit forecast.

Australia's S&P/ASX 200 Index lost 0.7 per cent, led by energy shares. South Korea's Kospi declined 0.4 per cent after a two-day holiday.

Futures on the S&P 500 dropped 0.1 per cent. The gauge fell 0.6 per cent on Monday for its first three-day slide of 2017. The index declined as much as 1.2 per cent before staging a late-day comeback. It's up 1.9 per cent in January and is higher by 6.6 per cent since Mr Trump's election.

Currencies

The Bloomberg Dollar Spot Index slipped less than 0.1 per cent after dropping 0.3 per cent on Monday. The gauge is trading near the lowest level in two months, and is down 2 per cent for the year.

The yen rose 0.2 per cent to 113.57 per US dollar. It jumped 1.2 per cent the previous session. 

Commodities

West Texas Intermediate crude slipped 0.3 per cent to US$52.45 a barrel, after losing more than one per cent during each of the previous two sessions. Drilling in the US rose to the highest in more than a year, countering Opec's efforts to clear a supply glut.

Gold added 0.3 per cent to US$1,199.48 an ounce, after rising 0.4 per cent the previous session.

Bonds

Australian 10-year yields were little changed at 2.73 per cent after similar-dated Treasury yields ended Monday at 2.49 per cent, after falling as low as 2.46 per cent. Microsoft Corp is returning to the market with a US$17 billion deal to refinance its shortest-dated debt less than six months after it sought funds for its LinkedIn Corp acquisition.

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