HONG KONG (Reuters) –
The dollar slipped on Tuesday as fears about the ripple effects of Dubai's debt woes eased while Asian shares were steady as investors took a breather after Monday's bounce.

The dollar (.DXY) dipped 0.2 percent against a basket of major currencies in early trade, reflecting cautious optimism that Dubai's problems with repaying debt would be contained, making it less pressing for investors to seek a safe haven. It later crept up and held steady after the Bank of Japan announced it will hold an emergency meeting at 0500 GMT.

Asian share markets were also steady after bouncing back on Monday.

In Australia, shares were flat (.AXJ0), and the Australian dollar was steady, ahead of an interest rate decision at 0330 GMT. Investors were torn over whether to expect a 25 basis point rate rise or whether the slide in global equity markets late last week triggered by the Dubai scare would prompt the Reserve Bank of Australia to keep rates unchanged.

Dubai World, the holding company at the heart of the Dubai crisis, on Monday announced a restructuring plan involving $26 billion in debt. However, there was lingering concern among global investors after the Dubai government said it was not responsible for Dubai World's debts, dealing a blow to creditors' assumptions that the Arab emirate would guarantee the government-controlled conglomerate's liabilities.

"Dubai is still a risk but most of Asia has very limited exposure to Dubai other than isolated banks. So people may want to avoid the banks but most other companies are okay," said Francis Cheung, an equities strategist at CLSA in Hong Kong.

Singapore's DBS Group (DBSM.SI), Southeast Asia's top lender, announced that it had $1.28 billion exposure to Dubai but its shares were up 0.6 percent, in line with the market.

The MSCI index of Asia Pacific stocks traded outside Japan (.MIAPJ0000PUS) was up 0.3 percent while the Thomson Reuters index of regional shares (.TRXFLDAXPU) was down 0.6 percent.

BOJ MEETING

Asian markets were encouraged by gains on Wall Street where the Dow Jones (.DJI) edged up 0.3 percent and there was good news after the closing bell as quarterly profits from retailer Guess Inc (GES.N) beat expectations and forecast holiday season earnings would exceed Wall Street estimates.

However, analysts said there was little news to drive Asian stocks higher after they bounced back on Monday.

Japan's Nikkei (.N225) index was down 1 percent as profit taking emerged after the market jumped nearly 3 percent on Monday.

Japanese government bond futures hit a 10-month high after Finance Minister Hirohisa Fujii boosted expectations for further monetary easing by the Bank of Japan as the yen's recent march to a 14-year high against the dollar has raised the risk of deepening deflation.

As the Bank of Japan was due to hold a special policy meeting at 0500 GMT, the yen dipped against the dollar.

"Investors are finding it hard to buy the yen further as the tone of remarks from Japanese authorities has changed recently," said Kazuyuki Takami, senior manager of foreign exchange trading at Bank of Tokyo-Mitsubishi UFJ in Tokyo.

Japanese officials have sounded increasingly worried about the yen's strength, which will hurt exporters and potentially aggravate deflation.

Economic data out of Asia, including China purchasing managers' indexes and a near 20 percent rebound in South Korean exports last month, indicated regional recovery was under way but had largely been factored into share prices.

Shares in Australian carrier Qantas (QAN.AX) however jumped 3.5 percent after the airline announced a 7 percent rise in October passenger numbers.

The oil price was steady at $77.30 a barrel after climbing 1.6 percent on Monday on news that Iran had restructured its naval forces for operations in the event of a conflict and had detained five Britons after their yacht strayed into Iranian waters.

Gold dipped slightly to $1,178.45 an ounce, but was not far off its New York close at $1,179.10.

(Additional reporting by Kaori Kaneko in TOKYO; editing by Tomasz Janowski)

BERLIN – Afghanistan has slipped three places to become the world's second most-corrupt country despite billions in aid meant to bolster the government against a rising insurgency, according to an annual survey of perceived levels of corruption.
Only lawless Somalia, whose weak U.N.-backed government controls just a few blocks of the capital, was perceived as more corrupt than Afghanistan in Transparency International's Corruption Perceptions Index.
Iraq saw some improvement, rising to 176 of 180 countries, up two places up from last year. Singapore, Denmark and New Zealand were seen as the least corrupt countries in the list based on surveys of businesses and experts.
In Afghanistan, President Hamid Karzai's inability or unwillingness to tackle cronyism and bribery the past five years have resulted in an increase of support for the Taliban insurgents. That has prompted calls by the Obama administration for Karzai to tackle the practice or risk forfeiting U.S. aid.
Since 2001, the U.S. Congress has appropriated more than $39 billion in humanitarian and reconstruction assistance for Afghanistan, according to a report by the U.S. Special Inspector General for Afghanistan Reconstruction. European nations send about 1 billion euros ($1.49 billion) a year, a total of 9 billion euros since 2002.
International donors are increasingly questioning how much of the billions of dollars in aid might have been misappropriated.
The report said examples of Afghan corruption ranged from the sale of government positions to daily bribes for basic services.
Karzai unveiled an anti-corruption unit and major crime fighting force on Monday after heavy pressure from Washington.
In reaction to the report, Ershad Ahmadi, the deputy director general of the High Office of Oversight and Anti-corruption in Afghanistan, said that "corruption is a phenomenon that will not go away overnight. It is a problem that will continue to be with Afghanistan for a long time.
"Until we achieve that sort of national awakening that business as usual is not in the interest of a peaceful and prosperous Afghanistan, you will not be able to achieve success in your anti-corruption campaign," Ahmadi said.
Robin Hodess, Transparency's director of policy and research, said Tuesday that for a country to improve on the corruption perceptions index, it is imperative that "citizens believe that they have a government that works for them."
The governments have to show "that there is the political will to respond to the needs of the people," Hodess said.
In Iraq, corruption has become widespread since the U.S.-led invasion that toppled Saddam Hussein in 2003 with scarcity of serious government measures against corrupted officials.
That has undermined the largest nation-building efforts with siphoning billions of dollars away from the country's struggling economy, increasing frustrations among Iraqis mainly over corruption, lingering violence and poor public services.
A Bertelsmann Foundation report used in the corruption index noted that in Iraq "non-security institutions remain weak and debilitated. The Iraqi leadership faces many structural constraints on governance, such as a massive brain drain, a high level of political division, and extreme poverty."
The United States, which was in 19th place compared with 18th last year, remained stable despite Transparency's concerns over a lack of government oversight of the financial sector.
The report also pointed out that the U.S. legislature is another reason for concern, as it is "perceived to be the institution most affected by corruption."
There were some bright spots in the new report — Bangladesh, Belarus, Guatemala, Lithuania, Poland and Syria were among the countries that improved the most.

___

Associated Press Writers Sinan Salaheddin in Baghdad and Fisnik Abrashi in London contributed to this report.

___

On the Net: http://www.transparency.org

WASHINGTON – The Army is preparing to do an internal investigation to examine whether it missed warning signs about the alleged shooter in the Fort Hood rampage, but top Pentagon officials may want a broader review of lessons from the tragedy.
Though it's still undecided who would do such a review and exactly what it would include, officials are working to make an announcement on it soon, a senior defense official said Tuesday on condition of anonymity because plans are still fluid.
Maj. Nidal Malik Hasan, an Army psychiatrist, is accused of killing 13 people in the Nov. 5 shooting rampage at the Texas base.
The Army is thinking about doing an internal investigation to examine Hasan's career and to determine whether warning signs were missed, a military official said Tuesday, also on condition of anonymity. Army Chief of Staff Gen. George Casey had said earlier that the service would take a hard look at itself following the Nov. 5 shooting.
But Defense Secretary Robert Gates and other top Defense Department leadership also have held a number of meetings on the tragedy, and Gates has not yet decided whether the Army's proposed study fully addresses his concerns, the defense official said. The official said there could be an Army study, a broader Pentagon study, or both.
Any new review would be have to be careful not to interfere with the ongoing criminal investigation, the defense official said. And so it could look at things outside that realm such as personnel policy and practices and whether there are adequate health services for troubled troops, the official said.
A top priority, he said, likely would be to look at red flags missed in Hasan's case, with an eye toward ensuring there are not other similar missed cases out there waiting to happen.
"A tragedy like this certainly gives this institution an opportunity to reflect on whether we are doing everything that we can and should to prevent something like this from happening," said Defense Department spokesman Bryan Whitman. He said Gates has not made any decision on a defense-wide review.
Two military officials said Tuesday that Casey is looking at forming an investigative panel. It would look at Hasan as a whole, his career development and at what point someone should have or might have raised an alarm, one of the officials said. The other said the terms of what the panel would do have not been defined.
The proposed Army probe would focus on Hasan's six years at Washington's Walter Reed Medical Center, where he worked as a psychiatrist before he was transferred to Fort Hood in July, one said.
The doctors who oversaw Hasan's medical training had discussed at a meeting concerns about Hasan's overly zealous religious views and strange behavior months before the attack, a military official told The Associated Press last week. Hasan also was characterized as a mediocre student and lazy worker, but the doctors saw no evidence that he was violent or a threat. The military official spoke on condition of anonymity because the official was not authorized to speak publicly about the meeting.
The FBI learned late last year of Hasan's repeated contact with a radical Muslim cleric in Yemen who encouraged Muslims to kill U.S. troops in Iraq. President Barack Obama already has ordered a review of all intelligence related to Hasan and whether the information was properly shared and acted upon within government agencies.
The Senate Homeland Security and Governmental Affairs Committee on Thursday will hold its first public hearing about the incident. Obama on Saturday urged Congress to hold off on any investigation, pleading for lawmakers to "resist the temptation to turn this tragic event into the political theater."
___
Department of Defense http://www.defenselink.mil
Army http://www.army.mil