Asia joins global stock rally after ECB signals more stimulus

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By Lisa Twaronite and Nichola Saminather

TOKYO/SINGAPORE (Reuters) - Asia extended a global stock rally on Friday after the European Central Bank signaled its readiness to inject more stimulus, helping the dollar scale a fresh two-month peak against the euro.

European stocks also looked set to open higher, with financial spreadbetters expecting Britain's FTSE 100 to open up 0.4 percent, Germany's DAX 1.3 percent and France's CAC 40 as much as 1.2 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.7 percent, and set for a gain of around 1 percent for the week.

Japan's Nikkei stock index closed 2.1 percent higher, ending the week up 2.9 percent.

The Shanghai Composite index added 1.4 percent, on track for a weekly gain of 0.7 percent.

"Investors and traders are buying the idea of expected action out of the Bank of Japan and the ECB," said Ben Le Brun, market analyst at trading platform provider optionsXpress.

"In effect, what we may see in the short term is cheering for any bad data out of those two economies."

After the ECB held policy steady at its meeting on Thursday as widely expected, central bank chief Mario Draghi told a news conference that ECB policymakers were "open to the full menu of monetary policy" to stoke the euro zone economy as needed.

The euro marked its largest one-day percentage drop against the dollar in nine months on Thursday.

The common currency held steady at $1.1108 on Friday, after earlier falling to a two-month nadir of $1.1072.

"When (ECB executive board member Benoit) Coeure said in May that the ECB could expand its QE, the euro fell below $1.10. But what's different now from that time is the U.S. monetary policy outlook," said Minori Uchida, chief currency strategist at the Bank of Tokyo-Mitsubishi UFJ.

"While Fed officials are talking about the possibility of a rate hike in December, whether it is really possible will be a focus next week," he said.

The Fed will meet on Tuesday and Wednesday, after its policymakers opted to hold interest rates steady last month, amid concerns that a slowing global economy, particularly in China, could pose risks to the U.S. economic outlook.

The Chinese central bank's injection of 105.5 billion yuan into 11 banks via its medium-term lending facility this week, combined with possible additional stimulus from the ECB, "may give the Fed more reason to raise rates by year end," said Chris Brankin, chief executive officer of online trading platform TR Ameritrade Asia in Singapore.

But another disappointing U.S. job report next month after October's weaker-than-expected growth "might be cause for further pause," he said.

The euro's plunge helped lift the dollar index to a one-month high. After rising as high as 96.579 in early Asian trade, it was last holding at 96.337, up 1.9 percent for the week.

The dollar was also steady against the yen at 120.61 yen, after touching a one-month high of 120.99 yen earlier, and set for a gain of 1 percent for the week.

Crude oil prices edged up, taking heart from the improved risk sentiment but still pressured by concern about high U.S. crude inventories and the stronger dollar.

Brent climbed 0.7 percent to $48.42 a barrel, but was on track for a weekly loss of 4 percent. U.S. crude added 0.4 percent to $45.60 but was down 3.7 percent for the week.

The stronger greenback also weighed on spot gold prices. Gold was last trading at $1,168.65 an ounce after touching a nine-day low of $1,162.50 overnight, and was down 0.7 percent for the week.

(Reporting by Lisa Twaronite and Nichola Saminather; Additional reporting Hideyuki Sano in Tokyo.; Editing by Shri Navaratnam & Kim Coghill)