Dec. 25 (Bloomberg) — The dollar fell, poised to end three weeks of gains, on speculation the Federal Reserve will maintain stimulus measures to secure the U.S. recovery. Japanese stocks dropped the most in two weeks, while copper and rubber climbed to 15-month highs.

The greenback fell against 11 of its 16 most-traded counterparts before reports next week forecast to show a slide in U.S. business activity and a rebound in initial jobless claims. Makers of electronics and cars led a 0.4 percent drop in Japan’s Nikkei 225 Stock Average on concern recent gains made shares expensive relative to earnings. Copper and rubber advanced on optimism that the global economic recovery will boost demand for materials.

“Speculation about an early exit from credit easing in the U.S. may weaken if incoming data confirm a patchy recovery,” said Keiji Matsumoto, a currency strategist in Tokyo at Nikko Cordial Securities Inc.

The dollar was at $1.4383 per euro at 3:25 p.m. in Tokyo from $1.4380 yesterday in New York. It appreciated to $1.4218 on Dec. 22, the strongest level since Sept. 4. The greenback slipped 0.1 percent to 91.43 yen and 0.2 percent 88.44 cents to the Australian dollar. The Japanese currency climbed 0.1 percent to 131.46 per euro.

Japan and China were the only major markets open today, the rest being shut for the Christmas holiday. The number of shares traded on the Tokyo Stock Exchange was the lowest for a full day this year. The MSCI Asia Pacific Index of regional shares dipped 0.1 percent.

Jobless Claims

The Institute for Supply Management-Chicago Inc. will report on Dec. 30 its barometer of U.S. business activity fell to 55.1 in December from 56.1 the previous month, according to a Bloomberg News survey of economists. Readings above 50 signal expansion.

The number of Americans filing claims for unemployment benefits in the week ending 27 probably rose to 460,000 after dropping to 452,000 in the previous week, the lowest level since September 2008, according to a separate survey ahead of the release of the data on Dec. 31.

Fed Bank of St. Louis President James Bullard said he sees interest rates remaining near zero in 2010 as the central bank tries to keep the recovery on track, the Wall Street Journal reported this week.

‘Tap Excess Dollars’

“Unless we see a more clear picture about the withdrawal of dollars by the Fed, there is a good chance of investors tapping excess dollars again and resuming investments on higher- yielding currencies,” said Yuichiro Harada, senior vice president of the foreign-exchange division at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest lender.

Canon Inc., which is the world’s largest camera maker and surged 8 percent in the past two days, lost 1.7 percent. Toyota Motor Corp., the world’s biggest carmaker, retreated 1 percent following a two-day, 4.6 percent advance.

The Nikkei 225 added 3.5 percent this week while Japan’s broader Topix index gained 1.8 percent, swelling the price of stocks in the gauge to 1.12 times book value on average, the highest level since Sept. 25.

“The market is just taking a breather from the rally,” said Yoshinori Nagano, a senior strategist in Tokyo at Daiwa Asset Management Co., which oversees the equivalent of $94 billion. “People are feeling cautious, and they’re taking profits.”

China Listings

Japan’s core consumer prices excluding fresh food fell 1.7 percent in November from a year ago, the statistics bureau said today. The unemployment rate rose for the first time in four months in November, a separate report showed.

China’s Shanghai Composite Index lost 0.4 percent, paring its first five-day gain in three weeks, on concern new share sales will divert money from existing equities. Zijin Mining Group Co. and China Shenhua Energy Co., the nation’s largest producers of gold and coal, lost at least 1 percent as eight companies debuted in Shenzhen’s ChiNext market for start-up companies.

Copper for March-delivery on the Shanghai Futures Exchange rose as much as 1.1 percent to 57,720 yuan ($8,454) a metric ton, the highest price for a most-active contract since Sept. 4, 2008. It closed at 57,630 yuan.

Rubber Prices

Copper prices gained as much as 2.4 percent yesterday in London as the Standard & Poor’s 500 Index rose to a 15-month high after initial jobless claims in the U.S. fell more than forecast and orders for durable goods excluding transportation topped economists’ estimates.

“Rising U.S. equities and a falling dollar increased risk appetite, spurred more buying,” Wang Lei, an analyst at Haitong Futures Co. said today by phone from Shanghai.

Natural rubber for June delivery climbed as much as 1.5 percent to as high as 278.9 yen per kilogram ($3,050) a ton on the Tokyo Commodity Exchange and closed at 276.3 yen.

“Rising crude oil price and a weakening yen continue to drive rubber prices higher,” Rewat Yenchai, an analyst at AGROW Enterprise Ltd., said by phone from Bangkok today.

Crude oil for February delivery rose 1.8 percent yesterday to $78.05 a barrel on the New York Mercantile Exchange, the highest settlement since price since Dec. 1. Oil is up 75 percent this year and is heading for the biggest annual gain in a decade.

Source: Bloomberg

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