HONG KONG (Reuters) - The dollar crawled up on Monday from a one-year low against a basket of currencies as speculators unwound bets against the U.S. currency, while the yen's surge drove Tokyo shares down 2 percent.
Oil dropped about $1 a barrel to near $68 and gold prices dipped on the dollar's slight gains, even as investors remained nervous that the dollar's gain was only a brief respite in a deeper slide.
The rebound in global stock markets have prompted many portfolio managers to pull funds out of safe-haven cash and shift it into equities, while the surge in gold has revived worries about the Federal Reserve's ultra-loose policy stoking inflation.
Japan's Nikkei average .N225 shed 2.5 percent as investors are fretting about how the yen's surge against the dollar will hurt the country's exporters still reeling from the Japanese currency's record rise last year. A rising yen erodes the value of the earnings exporters make abroad.
"Japan will be hit by the stronger yen," said Masayoshi Yano, senior market analyst at Meiwa Securities.
Japanese exporters are likely to feel the pain of a stronger yen at levels below 95 to the dollar. The 95 level was roughly the average rate seen by large exporters in the Bank of Japan's last quarterly tankan survey for the current business year ending in March.
Among exporters, computer and mobile phone maker NEC (6701.T: Quote, Profile, Research) fell 4.5 percent and was one of the biggest decliners in the Nikkei. Back in July, NEC said it has assumed a dollar/yen rate of 90 yen for the current business year.
Bucking the trend, shares of Japan Airlines (9205.T: Quote, Profile, Research) jumped 6.8 percent after sources said both American Airlines (AMR.N: Quote, Profile, Research) and Delta Airlines (DAL.N: Quote, Profile, Research) were in talks about investing in JAL and forming an operational alliance.
Asian shares fell but fared better, with the MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS down 1.4 percent. On Friday the U.S. S&P 500 .SPX dipped just 0.1 percent, but S&P futures were pointing to a bigger drop at the opening bell later in the day.
The dollar index, a gauge of its performance against six major currencies, rose 0.3 percent to 76.863 .DXY after tumbling 1.9 percent last week, the biggest weekly drop since May.
The dollar was little changed against the yen at 90.40 yen after having slid as far as 90.18 yen on trading platform EBS in early trade.
Traders said some market players were buying the dollar to protect option positions near 90 yen, but on the charts the dollar was looking more likely to test the 14-year low of 87.10 yen touched in January.
The euro was down 0.4 percent at $1.4545 and coming under pressure after having trouble pushing above $1.46 in the past few days.
Higher-yielding currencies were harder hit. The Australian dollar dropped 0.8 percent to $0.8575 and the New Zealand dollar lost 1.4 percent to $0.6980, both retreating from one-year peaks.
Data earlier showed New Zealand retail sales posting a surprising fall in July, reinforcing expectations that the central bank will keep rates on hold for a while longer.
Government bonds pushed higher on the drop in stocks, but gains were limited. The benchmark 10-year Japanese government bond yield dipped half a basis point to 1.295 percent, back near a two-month low.
