World stocks muted, dollar hits 6-year high vs. yen

A foreign exchange firm employee works next to a screen displaying the Japanese yen's exchange rate against the U.S. dollar at a dealing room in Tokyo on Sept. 9, 2014.

REUTERS/Yuya Shino

KUALA LUMPUR, Malaysia - Asian stock markets notched modest gains Tuesday and the dollar hit a six-year high against the yen on investor expectations the Federal Reserve will end stimulus and raise interest rates in coming months. European stocks were slightly lower.

France's CAC 40 was down 0.1 percent at 4,468.77 and Germany's DAX shed 0.1 percent to 9,750.20. Britain's FTSE 100 was down 0.2 percent at 6,824.42 amid jitters Scotland will vote to split from the United Kingdom in a Sept. 18 independence referendum. The pound stabilized after a sharp fall Monday. Futures pointed to a weak session on Wall Street. S&P 500 futures were down 0.1 percent and Dow futures were little changed.

A possible severing of Scotland's centuries-old union with England is alarming international investors and could spell trouble for the United Kingdom, which is Europe's third largest economy. It could hit Britain's trade balance and dent its income with oil reserves possibly reallocated back to Scotland. The pound fell more than one percent Monday after a poll showed a narrow majority in favor of Scottish independence for the first time.

The dollar extended its rally, hitting 106.40 yen, the highest since September 2008. Compared with other major currencies beset by bad economic data or possible further stimulus, the dollar appears the most attractive as the U.S. central bank looks to end stimulus by October and consider hiking interest rates.

Japan's Nikkei 225 gained 0.3 percent to 15,749.15 and China's Shanghai Composite was barely changed at 2,326.53. Australia's S&P/ASX 200 rose 0.6 percent to 5,607.90. India's benchmark fell and Southeast Asian stocks were mostly down. Hong Kong and South Korean exchanges were closed for holidays.

"Risk currencies including the euro, pound and Aussie have already lost significant ground against the greenback this week and it seems this trend is set to continue in the near term," said IG strategist Stan Shamu in a market commentary.

Oil prices fell for three days straight as geopolitical worries over Ukraine and Iraq have eased. Also affecting crude oil was last week's report of a slowdown in Chinese manufacturing and data Monday that showed China's imports fell for a second month in a row. Benchmark U.S. crude oil for October delivery rebounded a bit Tuesday. The contract was up 44 cents at $93.13 a barrel in electronic trading on the New York Mercantile Exchange. It fell 63 cents to $92.66 a barrel in New York on Monday, the lowest price since January.

The dollar rose to 106.20 yen from 106.02 yen late Monday. The euro dropped to $1.2890 from $1.2897.