* Dollar teeters towards new low vs yen on gloomier Fed

By Kevin Yao

SINGAPORE, Aug 11 (Reuters) - The dollar teetered toward a
15-year low against the yen on Wednesday after the Federal
Reserve gave a more pessimistic assessment of the weakening
U.S. economy, while technology plays dragged Asian stocks

Major European stocks fell 0.5 percent in early trade,
while U.S. Treasury futures hit their highest in 17 months
after the Fed announced it would buy more government bonds to
help shore up flagging growth.

Markets are still awaiting further details on the Fed plan,
but analysts doubted the amount of the purchases would be large
enough to have a substantial stimulative impact.

Some market watchers believe the Fed's move could actually
fuel more concern about the economy, hurting investors'
appetite for riskier assets such as stocks and commodities.

"The Fed will take more actions in the future to inject
more money into the bank system. You can say that's the second
wave of quantative easing," said Daniel Chan, chief economist
and wealth management strategist BWC Capital markets in Hong

"That will be positive for U.S. treasuries market but not
positive for global stock markets," he added.

The U.S. central bank said on Tuesday it would reinvest the
money from maturing mortgage bonds it holds into government
debt to counter recent signs of economic weakness. It left
interest rates near zero and renewed its pledge to keep them
low for an extended period.

U.S. Treasuries prices rallied, with yields on the
benchmark 10-year U.S. Treasury note falling to 2.7416 percent,
the lowest in more than four months.

September futures on the 10-year Treasury note rose 8.5/32
to 125-8/32 after hitting a 17-month peak at 125-9/32.

The step marked an important policy shift for the Fed,
which only a few months ago debated how to start rolling back
some of its emergency stimulus schemes put in place during the
global financial crisis.

But the Fed's more sombre assessment of the economy added
more pressure on the ailing U.S. dollar, which continued to
weaken against the yen.

Japan's Nikkei average dropped 2.7 percent, as yen strength
and worries about weaker demand undermined shares of exporters.
Honda Motor Co and Canon Inc both shed 3.3 percent, while Sony
Corp fell 2.8 percent.

"Worries about a further strengthening in the yen against
the dollar grew after the Fed's new steps towards easing policy
and with the Bank of Japan maintaining the status quo," said
Masaru Hamasaki, a senior strategist at Toyota Asset

The MSCI index of Asia Pacific stocks outside Japan fell
1.5 percent, dragged down by tech counters after brokerages
downgraded their business outlooks for several major U.S.
sector bellwethers.

Overnight, the Dow Jones industrial average and the
Standard & Poor's 500 Index fell but closed off their lows
after the Fed pledged to underpin the recovery.

But tech companies pressured the Nasdaq, with chipmakers
Intel Corp and Advanced Micro Devices Inc falling on analysts'
downgrades, while Novell Inc dropped a day after cutting its
third-quarter revenue outlook. and

Korean shares fell 1.3 percent as Hynix Semiconductor, the
world's No.2 memory chip producer, tumbled nearly 6.2 percent
following the selloff in U.S. chipmakers.

Asian traders saw some comfort in fresh data from China,
however, which confirmed its strong economic growth was
moderating but showed no signs it was in danger of a hard


The dollar dipped a fifth of a percent to 85.32 yen edging
towards an eight-month low of 85.02 yen hit last week. If it
slips below November's low of 84.82 yen, it would mark the
currency's weakest level in 15 years.

"The dollar could fall below 85.00 yen at any moment," says
Shuichi Kanehira, head of FX spot trading at Mizuho Corporate

The Australian dollar shed 0.9 percent against the yen to
77.35 yen the euro lost 0.4 percent to 111.75 yen and sterling
fell 0.5 percent to 134.78 yen

The low-yielding yen is a funding currency for carry trades
and tends to rise in times of market stress.

Elsewhere, oil fell 66 cents to $79.59 a barrel on demand
concerns after data showing a rise in U.S. crude imports
overshadowed a deeper-than-expected decline in crude stocks.

Spot gold gained 35 cents to $1,202.20 an ounce after the
Fed's move, still below a 3-week high of $1,212.61 hit last
(Additional reporting by Aiko Hayashi, Masayuki Kitano and
Rika Otsuka in TOKYO; Editing by Kim Coghill)