Asia shares hit 1-month high, oil tumbles to four-year low

Investors bet more central bank stimulus in China and Europe will shore up the global economy

Asian stocks hit a one-month high on Thursday as investors bet that more central bank stimulus in China and Europe would shore up the global economy, while oil prices tumbled to a four-year low as hopes for output cuts by OPEC faded.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.3% while Shanghai shares hit a three-year high, extending their rally after a surprise interest rate cut last week. They are up 8.2% so far this month.

"The rate cut clearly showed the Chinese authorities are very much keen to support the economy. So even though Chinese economic data has been pretty weak, investors are convinced that there will be no hard landing," said Naoki Tashiro, the president of TS China Research.

Japan's Nikkei shed 0.8% as the yen rebounded mildly but has gained 5.1% so far this month to become the second best performing market in the region after China following a surprise easing by the Bank of Japan at the end of October.

European shares are expected to rise with spreadbetters projecting 0.4% gains in France's CAC 40 and 0.3% rise in Germany's DAX, which advanced for a 10th straight session on Wednesday, as investors bet on further monetary stimulus from the European Central Bank.

"I expect a moderate (equities) rally to continue, perhaps led by European shares given signs of recovery there," said Soichiro Monji, chief strategist at Daiwa SB Investments.

On Wall Street, stocks rose on Wednesday thanks to gains in tech shares, with the S&P 500 and Dow industrials closing at records despite disappointing US economic data.

Durable goods orders, a measure of business spending plans, fell for a second straight month, consumer spending rose less than expected and new home sales also unexpectedly fell.

A separate report from the Labor Department showed initial claims for state unemployment benefits last week were above 300,000 for the first time since early September.

All of which helped push down US debt yields, with 10-year notes yield hitting a five-week low of 2.229% on Wednesday.

The dollar stepped back further from a 4-1/2-year peak against a basket of currencies hit on Monday. The dollar index stood at 87.634 versus Monday's peak of 88.440.

The US currency fetched 117.28 yen, off last week's seven-year high of 118.98 yen while the euro traded at $1.2501, having extended its recovery from a low of $1.23595 on Monday.

Still, the common currency is likely to be hemmed in by expectations that the ECB could start buying sovereign debt, as other major central banks have done.

Vitor Constancio, the central bank's vice president, said on Wednesday the ECB might decide to do so as early as the first quarter of next year, in the clearest indication yet from an ECB policymaker on the timing of any quantitative easing.

He also suggested the ECB is likely to buy government bonds broadly in proportion to the size of the euro zone's 18 economies.

While many markets saw subdued trading on Thursday as US financial markets are shut for Thanksgiving Day, oil markets were rattled after OPEC signaled that it would hold off making any major production cuts this week.

OPEC Gulf Arab oil producers have reached a consensus not to cut oil output when OPEC meets on Thursday, a Gulf Arab OPEC delegate told Reuters..

US crude futures fell more than 1% to $72.61 per barrel, their lowest since September 2010. Brent crude fell 1.7% to $76.49.