Asia edges up after oil rebound, growth worries remain

By Shinichi Saoshiro

TOKYO (Reuters) - Asian stocks pared earlier losses and edged up on Thursday after a significant rebound in oil prices brought a semblance of calm, but global growth worries remained after weak U.S. retail sales data compounded concerns over plunging copper prices.

MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 percent.

Japan's Nikkei bounced 1.5 percent and the Shanghai Composite Index climbed 0.6 percent.

Bucking the trend, stocks in Australia, heavily dependent on exports of natural resources, lost 0.4 percent. South Korea's KOSPI dropped 0.4 percent.

"Consumers gain purchasing power when oil prices fall, but the fact that U.S. retail sales fell in December despite cheap oil has highlighted a serious deflation risk," said Chun Jung-hun, an analyst at Kiwoom Securities.

Copper skidded to a 5-1/2-year low on Wednesday as the recent decline in oil prices amplified fears about the state of the global economy. The industrial metal is generally considered a barometer of world demand.

After plunging 5.3 percent overnight, benchmark LME copper edged up 1.6 percent to $5,639 a tonne, though traders said buyers were eerily quiet. [MET/L]

Wednesday's data from the United States further checked risk appetite, with investors already feeling a chill from the World Bank's downgrade of its 2015 and 2016 economic forecasts.

U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, tempering expectations for a sharp acceleration in consumer spending in the fourth quarter.

Oil prices retained a bulk of their gains after rebounding from near six-year lows overnight as traders turned away from bearish bets stoked by a global supply glut to cover expiring options. [O/R]

U.S. crude was down 0.7 percent at $48.11 a barrel after surging nearly six percent overnight.

The technical nature of the rebound in oil prices kept markets cautious about the outlook.

"The question is whether the market sees the current decline as overdone and is now establishing a bottom or is resetting and will go again," Evan Lucas, market strategist at IG in Melbourne, said in note to clients.

"I see the latter as the most likely scenario - the oil rout is far from over and it looks to me like a dead cat bounce."

In currencies, the dollar nursed losses after the weaker-than-expected U.S. retail sales data pulled U.S. Treasury yields sharply lower on Wednesday. [FRX/]

The dollar crawled up 0.3 percent to 117.65 yen after going as low as 116.06 overnight, its lowest in a month.

Giving the dollar a bit of respite against the yen, the benchmark 10-year Treasury yield was at 1.8758 percent after touching a 20-month trough of 1.7840 percent.

The disappointing U.S. data led the market to push further out the day when the Federal Reserve is likely to deliver its first interest rate increase, which many analysts had suspected could come in June.

The euro fetched $1.1783, limping away from a nine-year low of $1.1728.

The Aussie surged after strong Australian jobs data led the market to push back the risk of a rate cut in the short term.

The Aussie was up 0.5 percent at $0.8191, putting distance between a six-year low of $0.8033 touched last week.

(Additional reporting by Joonhee Yu in Seoul; Editing by Shri Navaratnam and Jacqueline Wong)