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Japan Stocks Tumble, Yen Gains Amid Risk Aversion

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Japanese shares tumbled after the yen jumped to the highest since November as investors avoided riskier assets amid lingering geopolitical concerns. Treasuries extended gains and gold traded at the highest level this year.

Japan’s Topix fell to the lowest level of the year after the yen breached 110 yen per dollar for the first time since November. South Korean shares were steady after a six-day selloff. Chinese shares traded in Hong Kong slipped after data showed factory inflation eased. The yield on 10-year U.S. notes continued to fall after closing below 2.3 percent for the first time in four months. Oil extended its longest winning streak since December.

The VIX, Wall Street’s so-called fear gauge, climbed to a level unseen since November as North Korea warned of a nuclear strike if provoked, while President Donald Trump said the U.S. would “solve the problem” with or without China. The U.S. separately said evidence clearly showed Syria was behind a chemical attack on civilians this month and accused Russia of trying to cover up for its ally by spreading disinformation. Secretary of State Rex Tillerson urged Russia to abandon its support of Syrian President Bashar al-Assad’s regime.

Here’s what investors are watching:

The U.S.-Russia relationship will be closely monitored as Tillerson visits Moscow. While he is set to meet with Russian Foreign Minister Sergei Lavrov on Wednesday, it’s not clear whether President Vladimir Putin will agree to see him amid the increasing tensions.

In central bank actions, Canada will probably hold its benchmark interest rate at 0.5 percent while Brazil will likely lower its key rate by a full percentage point, the biggest cut since 2009, as inflation has slowed by half in the last year.

IMF Managing Director Christine Lagarde speaks about the global economic outlook in Brussels.

Read our Markets Live blog here

Here are the main moves in markets:

Currencies

The yen rose 0.2 percent to 109.41 against the dollar as of 2:10 p.m. in Tokyo, after jumping 1.2 percent on Tuesday for the biggest increase since January.

The Bloomberg Dollar Spot Index was flat. The South Korean won rose 0.2 percent, after six days of declines.

Stocks

Japan’s Topix fell 1.3 percent, led by declines in banks, autos and other exporters. South Korea’s Kospi rose less than 0.1 percent, after dropping 2 percent over the previous six sessions. Australia’s S&P/ASX 200 index was little changed.

The Hang Seng China Enterprises Index lost 0.5, after sliding 0.9 percent on Tuesday to the lowest in a month. The Shanghai Composite fell 0.3 percent. China’s producer price gains slowed last month from a peak in February, tempering the global inflation outlook.

Futures on the S&P 500 fell 0.2 percent. The benchmark gauge finished 0.1 percent lower on Tuesday, while the Stoxx Europe 600 was little changed.

Bonds

The yield on 10-year Treasuries fell one basis point to 2.29, after dropping seven basis points on Tuesday.

Australian 10-year yields slipped three basis points to 2.50 percent.

Commodities

Oil climbed 0.2 percent to $53.50 a barrel, after advancing for six straight sessions. Saudi Arabia is likely to support extending OPEC output cuts into the second half of 2017 in an effort to boost oil prices, according to a person familiar with the kingdom’s internal discussions.

Gold added 0.1 percent to $1,276.10 an ounce, after jumping 1.6 percent on Tuesday to the highest since Nov. 9.

Source: Bloomberg