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June 23, 2017

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Shares mostly higher, strong dollar buoys Japan

TOKYO/HONG KONG -- World stocks were mostly higher Tuesday as investors awaited central bank meetings later this week in Europe as well as U.S. employment figures. The U.S. dollar extended its rally against the euro and the yen on expectations the Fed will be the first major central bank to raise interest rates.

In early European trading, Britain's FTSE 100 gained 0.3 percent to 6,845.33 while Germany's DAX rose 0.9 percent to 9,568.19. The CAC-40 in France was up 0.5 percent to 4,400.08. Futures augured gains on Wall Street after being closed Monday for a public holiday. Dow futures were up 0.2 percent to 17,124. Broader S&P 500 futures rose 0.2 percent to 2,005.50.

Traders will be focusing on the U.S. employment report for August due Friday. Investor confidence over the U.S. economy has risen following several months of strong growth in hiring and corporate profits and a series of major corporate acquisitions.

Asian markets mostly rose on Tuesday, with Tokyo gaining more than one percent as the yen sank against the dollar, while Shanghai was boosted by hopes China will introduce economy-boosting measures.

Tokyo rallied 1.24 percent, or 192.00 points, to 15,668.60 and Sydney rose 0.51 percent, or 28.67 points, to close at a six-year high of 5,658.5.

Shanghai jumped 1.37 percent, or 30.54 points to 2,266.05. Hong Kong finished almost unchanged, edging down 3.07 points to 24,749.02.

However, Seoul closed 0.79 percent lower, giving up 16.28 points to 2,051.58.

The Nikkei was the stand-out major performer Tuesday as the dollar edged towards the 105 yen level not seen since the start of the year, with analysts suggesting dealers are betting on the Bank of Japan to loosen monetary policy.

A weaker yen boosts Japanese exporters.

Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, said in a note that recent weakness in the yen suggests dealers "have quietly started factoring in the BoJ's additional monetary easing."

The bank holds a two-day policy meeting this week following a string of weak data, with its policymakers facing calls to unveil new economy-boosting measures which would tend to weigh on the yen.

In China dealers are betting on Beijing introducing more accommodative measures after the release Monday of its official PMI and a separate one by HSBC showing a slowdown in manufacturing growth.

While leaders have refused to launch anything on the scale of the stimulus seen in 2008, traders are hoping a batch of small measures seen earlier this year could be added to.

Gold traded at US$1,271.33 an ounce at 1120 GMT, from US$1,286.98 late Monday.

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