Dollar firms in Asia

TOKYO: The dollar and euro rose against the yen in Asia on Tuesday as investors bet Japan´s public pension fund, the world´s biggest, will start to shift some of its holdings into foreign assets.

In Tokyo, the greenback rose to 102.02 yen from 101.84 yen in New York, although its gains were capped ahead of Federal Reserve policy meeting and owing to nerves about the unrest in Iraq, which has sent oil prices soaring.

The euro also rose to 138.39 yen from 138.20 yen, while it weakened to $1.3564 from $1.3570 in New York.

Dealers said the dollar was gaining support from expectations that Japan´s $1.26 trillion public pension fund would soon shift more of its bond-heavy assets.

Dumping low-yield sovereign bonds in search of higher, but riskier returns, could see cash flood global markets, boosting equities and demand for riskier currencies such as the greenback and euro.

The move could also see other Japanese pension funds follow suit, said Daisaku Ueno, chief foreign exchange strategist at Mitsubishi UFJ Morgan Stanley.

However, the market mood was weighed by concerns over Iraq as militants sweep across the country, taking over key cities and heading for Baghdad.