Dollar hits low vs euro, Nikkei dips as PM resigns

The dollar sunk to a record low versus the euro on Wednesday as an expected cut in U.S. interest rates was seen eroding the U.S. currency's yield appeal, while Japanese stocks and the yen slipped after Japan's embattled Prime Minister Shinzo Abe resigned.
Shares elsewhere in Asia rose, with energy stocks in favor after U.S. crude hit a record closing high the previous day, and on expectations the Federal Reserve will lower its benchmark interest rate next week.
European stocks were seen steadying after making strong gains on Tuesday, with financial bookmakers anticipating Britain's FTSE 100 (.FTSE: Quote, Profile, Research), Germany's DAX (.GDAXI: Quote, Profile, Research) and France's CAC 40 (.FCHI: Quote, Profile, Research) all to open little changed.
MSCI's measure of Asia Pacific stocks excluding Japan climbed 0.2 percent by 0630 GMT, adding to Tuesday's 0.7 percent rise, but the Nikkei average (.N225: Quote, Profile, Research) ended 0.5 percent lower after Abe resigned.
"One of the reasons why Japanese stocks have been underperforming, compared to other global markets, was political uncertainty," said Hiroshi Motoki, managing director and chief investment officer at AIG Global Investment Corp in Japan.
"That news will add another negative factor."
Analysts said Japanese stocks would remain under selling pressure until Abe's successor is announced. They added that political uncertainty would support the JGB market, which rose on the news.
Japanese government bond futures ended up 0.23 point at 136.33, after climbing to 136.41, the highest level hit by a lead contract since February 2006.

The impact on the yen was short-lived, with attention more closely focused on weak U.S. economic fundamentals.
"Amid strengthening expectations for interest rates to be cut in the United States, interest rate differentials in the United States and the euro zone seem likely to narrow," said a trader at a Japanese trust bank.
"It looks like the euro will continue to be well supported."
The euro climbed to $1.3880, edging up around 0.3 percent on the day.
The dollar traded at 113.90, retreating from the day's high of 114.40 yen after initial reports that Abe would resign.
The euro was supported by European Central Bank Executive Board member Juergen Stark saying interest rate rises had not been abandoned.
Stark said on Tuesday the ECB had to remain "very vigilant" on inflation developments, comments which suggested the ECB may press ahead with tightening borrowing costs once the current market volatility abates.
Against the yen, the single currency traded around 158.00 yen, after climbing as high as 158.27 yen.

STOCKS GAIN

Although Japanese stocks struggled, bourses elsewhere in the region continued their rally from recent sell-offs.
The MSCI index has risen around 19 percent from a five-month trough plumbed on August 17, and is now just 5 percent below the July 24 record high.
Hong Kong's Hang Seng Index (.HSI: Quote, Profile, Research) climbed 1 percent, while Chinese stocks rose 0.6 percent, recovering after posting their biggest drop in two months on Tuesday on concerns about rising inflation and tighter monetary policy after consumer inflation jumped to a 10-year high.
In favor were energy firms such as Japan's Nippon Oil Corp (5001.T: Quote, Profile, Research) and Australia's Santos (STO.AX: Quote, Profile, Research) after U.S. crude traded around a record high close of $78.23 on Tuesday, not far off the lifetime high of $78.77 set on August 1.
The rise in oil came after an OPEC deal to ramp up production failed to calm concerns about thinning world inventories, which in turn helped boost base metals.
Gold miners including Lihir Gold (LGL.AX: Quote, Profile, Research) powered ahead after the precious metal hit 16-month highs above $714 an ounce on bearish sentiment toward the dollar and chart-based buying. At 0605 GMT, spot gold was at $713.25.