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Asia: Stocks rise, US dollar rebounds as Irma weakens

[SYDNEY] Asian stocks rose and the US dollar rebounded from its lowest in more than two years as hurricane Irma's force waned and the United Nations prepared to vote on tougher North Korean sanctions.

Japan's Topix index was headed for its biggest gain in more than three months as a weaker yen gave a boost to exporters. Equities also advanced in Seoul and Hong Kong, and Treasuries fell after North Korea refrained from an expected missile test at the weekend.

The US dollar rose against major peers as Irma, while devastating, didn't reach the feared Category Five storm that some had anticipated and looks to have spared Miami. The offshore yuan declined after China's central bank was said to have removed a reserve requirement on the trading of foreign-exchange forwards.

Risk appetite also returned to the markets as the chances of Federal Reserve interest rate increases this year receded after the US was struck by the first back-to-back major storms since 1964. New York Fed President William Dudley said in an interview with CNBC that hurricanes could affect the timing of rate hikes.

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Still, the shadow of North Korea remains. Pyongyang warned of retaliation if the United Nations Security Council approves harsher sanctions in response to the North's nuclear test. The UN will vote Monday on fresh sanctions, saying that Kim Jong Un's nuclear programme poses the most serious threat since World War II.

Pyongyang "is closely following the moves of the US with vigilance," its state-run Korean Central News Agency said on Monday, citing a statement by the Ministry of Foreign Affairs.

With Fed speakers now in a blackout period before next week's policy meeting, the focus this week be on assessing the impact of natural disasters on US growth. Investors will also parse data due on retail spending in the American economy and the US consumer price index as inflation remains stubbornly low. US CPI is projected to have risen in August at a faster pace.

KEY EVENTS THIS WEEK

Malaysia's factory output, due Monday, is predicted to have gained 5 per cent in July from a year earlier, accelerating from June's 4 per cent.

The Japanese tertiary industry index may have increased 0.1 per cent in July from June, when it was unchanged. The services measure is also scheduled for Monday.

Also due this week, India's trade surplus and China's August money supply, retail sales and fixed-asset investment for last month.

Australia releases jobs data on Thursday. It probably added fewer jobs in August - 19,000 - than the 27,900 in July and the unemployment rate is expected to hold at 5.6 per cent.

STOCKS

The Topix index advanced 1.4 per cent as of 12.30pm Tokyo time, on course for its steepest advance since early June. South Korea's Kospi index was up 0.8 per cent and the S&P/ASX 200 Index in Sydney also added 0.8 per cent.

Hong Kong's Hang Seng Index was up 0.9 per cent, while gauges in China fluctuated. Futures on the S&P 500 Index climbed 0.5 per cent. The underlying gauge fell 0.2 per cent on Friday.

The MSCI Asia-Pacific Index jumped 0.6 per cent to hit the highest since December 2007.

CURRENCIES

The yen fell 0.5 per cent to 108.41 per US dollar. The euro lost 0.2 per cent to US$1.2016.

The Aussie was at 80.46 US cents, down 0.2 per cent. The Korean won was little changed at 1,128.95 per US dollar.

The Bloomberg Dollar Spot Index rose more than 0.2 per cent. It lost 1.5 per cent last week, its worst week since May.

BONDS

The yield on 10-year Treasury notes climbed almost four basis points to 2.09 per cent.

Australian 10-year bond yields rose about four basis points to 2.61 per cent.

COMMODITIES

West Texas Intermediate crude added 0.7 per cent to US$47.82 a barrel in early trading after losing 3.3 per cent on Friday.

Gold declined 0.7 per cent to US$1,337.67.

BLOOMBERG