Asian Market Update: BoJ May Minutes RevealOngoing Uncertainty over Extent of Recovery; Former PBOC Adviser, TopTier Investment House Follow World Bank with China GDP Upgrade; USDMajors, Commodities in Narrow Ranges

- Asian equity markets are looking to finish a disappointing week on afirmer footing, however a late session selloff is providing littlereprieve for the apparent return of investor uncertainty. With about 90minutes to go in Tokyo trading, Nikkei225 has reversed its initial 1%rally to trade around unchanged levels, on track for a 4% overallweekly decline. Sydney's S&P/ASX fared better with a 0.6% advance,however Korea's Kospi was down 0.3% - also on target to match theNikkei's 4% weekly slide. Ahead of the US open, front-month S&Psare slightly higher, up about 0.2% at $915, while benchmark yields arepressured below 3.80% after a strong push to the upside in US hours.

-Retrospective minutes from the May Bank of Japan meeting marked thesole economic event of the session and predictably had little impact onmarket outlook in the wake of the June meeting on Tuesday. Overall, theminutes revealed ongoing uncertainty about economic conditions, eventhough May was the first month the policy board raised its assessmenton overall conditions. BOJ members noted that stimulus exit policy wasto be determined by the economy, while some saw ongoing risks ofprivate consumption weakening further as well as persisting uncertaintyof whether the output recovery can be sustained give the perilous stateof global demand. On inflation, BOJ members straddled both sides of thefence - some worried about the risks of rising commodity prices whileothers cautioned against ongoing expectations of further declines. Onthe bright side, the minutes did suggest evidence of improvement inliquidity conditions - sentiment that was reiterated in the most recentstatement earlier this week.

- In other notable macronews, a former PBOC advisor and a top-tier investment bank followedyesterday's vote of confidence on GDP prospects for China from theWorld Bank. Ex-PBoC adviser Yu said he had no doubt that China'seconomy can meet its 8% 2009 target, also expressing his concerns overthe inflationary impact of the Fed's quantitative-easing policy aheadof next week's Fed decision. Over in the private sector, Barclays wasalso upbeat on China's prospects, raising 2009 GDP estimates to 7.8%from 7.2% and 2010 estimates to 9.6% from 9.0% in 2010. Elsewhere, GDPforecasts for New Zealand were downgraded by the NZ Treasury by as muchas 2% on account of swine flu impacting the country's tourism andtravel business. Over in Korea, Financial Regulatory chairman weighedin on the recent monetary policy debate, noting that focus shouldremain with securing a sustainable economic turnaround, while alsodiscouraging allowing banks to repay recapitalization funds.

-In equity-specific developments, the gainers were generally led byfinancials and tech names across the region. Among the biggest moversin Tokyo, Elpida rose 4% on press rumors the company may apply for asmuch as Y40B in govt funds, and Chiyoda rallied over 5% after securinga contract worth about ¥100B for an oil well in Saudi Arabia. ShipperKawasaki Kisen was also firmer after an upgrade to Equal-weight fromMorgan Stanley. In Sydney, oil and gas names traded firmer on overallenergy strength, with Woodside Petroleum and Santos rising 3% and 1.5%respectively. Rio Tinto - a big loser in the prior session - saw itsshares remain under pressure to the tune of about 3% however, asregulatory uncertainty over approval of the BHP tie-up retained itsbearish pull.

- In currencies, US majors were generallycontained in narrow ranges after late US-session greenback bounce on areport that the British Bankers Association (BBA) fixing panelformulated plans to broaden the number of banks contributing to LIBORfixing. EUR/USD was last seen firmer just above 1.3920, GBP/USD rangedbetween 1.6300 and 1.6380, and USD/CHF retreated from intraday highsjust below 1.09 to 1.0830's. In commodity FX, AUD was last seentargeting intraday resistance around 0.8050, and USC/CAD returned below1.13.

- Crude oil is gaining in Asia and tracking theadvance in equities. In terms of Asian oil demand, Nippon Oil, Japan'slargest oil refiner, said that it planned to lower oil production by25% y/y in July, after cutting its June output by 4%. Nippon Oil citedlower domestic demand for its decision to curtail output. In OPEC news,the cartel's President said that oil prices are satisfactory forproducers and consumers at the moment. The OPEC President added thatoil prices at $70-$75/bbl are positive for the economy. Overall, oilprices are on track for the first weekly drop in 5 weeks. Spot Gold istracking the gains in oil prices, but prices are consolidating betweenthe $928-$929/oz area, which is seen as the 100-day moving average, and$944/oz, which corresponds with the neckline of a head and shoulderstop. In central bank news Russia, which holds the world's 3rd largestforeign exchange reserves, noted that in the week ended June 12 itsgold and forex reserves declined for the first time in 6-weeks to$406.6B from $409.5B. Overall gold prices are on pace to decline forthe 3rd consecutive week as markets await further catalysts.