Asian shares higher after U.S. data, Citi results

MARKETS-GLOBAL:Asian shares higher after U.S. data, Citi results

tokyo  October 16, 2012, 9:48 IST

tokyo  10 16, 2012, 09:50 IST

 

Asian shares rose on Tuesday after rallies in U.S. stocks and positive U.S. data cheered investors, while the euro inched up on hopes for some progress in the euro zone debt crisis.

U.S. stocks climbed on Monday after earnings from Citigroup Inc , the third-largest U.S. bank, as well as retail sales data strongly beat expectations.

European equities edged up on Monday, underpinned by expectations Spain is moving closer to asking for a bailout and news that Greece is seeking to bridge the gap on its austerity measures with its lenders at this week's European Union leaders' meeting. Still, officials said talks would most likely not be completed at the EU summit.

Greece's benchmark 10-year bond yield fell to its lowest since August 2011 at 17.51 percent on Monday, as investors scaled back bets the country will leave the euro zone.

"Stocks are supported by the fact that Europe now has a safety net in place to prevent its debt crisis from spinning out of control," said Masahide Tanaka, deputy general manager of asset management business planning department at Mizuho Trust & Banking Co Ltd.

"Global monetary easing and recent positive U.S. data have also helped ease concerns about growth slowdown, warming investor risk appetite," he said.

The MSCI index of Asia-Pacific shares outside Japan rose 0.5 percent.

Australian shares climbed 0.7 percent to a 14-month peak as investors pinned hopes on further easing by the Reserve Bank of Australia, but the index last traded up 0.2 percent. The early gain came after the central bank said it cut interest rates this month following a pullback in mining investment and a darker global outlook that threatened domestic growth.

Japan's Nikkei average gained 0.9 percent as an index heavyweight Softbank Corp <9984.T> rallied after the company confirmed a $20 billion acquisition of a U.S. competitor, Sprint Nextel Corp.

There was some caution, however, before China publishes third-quarter gross domestic product data on Thursday, while Chinese corporate profits show scant sign of a second-half recovery.

Tanaka at Mizuho Trust & Banking said that equities were also capped by an absence of a leading industry, with the tech-centred Nasdaq Composite Index coming some 4 percent off its September peak as a weak global economy and a growing preference for tablets hit the PC industry.

The euro was up 0.1 percent at $1.2961, confined to recent ranges, as investors wait for the clarity on the timing of bailouts for struggling Spain and Greece.

"Spain will be the focus in the very near term. It appears increasingly unlikely that the October 18-19 summit will deliver a formal bailout request for Spain," Barclays Capital said in a research note. "We continue to see volatility in EUR as being too low, given the risks."

DOLLAR/YEN LOOKING FIRM

Traders said momentum is gaining for the dollar to test its upside against the yen. The dollar rose 0.2 percent to 78.81 yen.

With the dollar now near the top of the Ichimoku cloud at 78.88-78.90, a break above that level could pave the way for the currency to hit a key technical level of its 200-day moving average which currently stood near 79.40 yen, said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.

Investors will likely focus on the second U.S. presidential debate with Republican candidate Mitt Romney and President Barack Obama, slated for Tuesday at 9 p.m. EDT (0100 Wednesday GMT) in Hempstead, New York.

"If Romney gathers further momentum, stocks may fall and may benefit the dollar as risk appetite recedes," Saito said, adding that markets perceive Romney as against extending quantitative easing, which also weighed on stocks.

Some traders said speculation about Softbank tapping markets for financing its deal, the biggest overseas acquisition by a Japanese firm, is supporting the dollar/yen.

An unclear direction for the dollar, as reflected in a lacklustre dollar index which measures against a basket of six key currencies, has weighed on gold.

Spot gold steadied at $1,735.99 an ounce, after hitting its lowest in over one month at $1,728.75 on Monday.

U.S. crude futures were down 0.3 percent at $91.62 a barrel and Brent was down 0.1 percent at $115.67.

Asian credit markets firmed, with the spread on the iTraxx Asia ex-Japan investment-grade index narrowing by 3 basis points.

(Editing by Richard Borsuk)