Asia stocks up after ECB signals easing, oil extends rally

By Shinichi Saoshiro

TOKYO (Reuters) - Asian stocks gained early on Friday, after the markets were given some breathing space when the European Central Bank hinted of more monetary policy easing, while crude oil extended an overnight rally.

Japan's Nikkei bounced 3 percent to move away from a 15-month low struck Thursday and Australian shares rose 0.9 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.9 percent. The index probed a four-year low on Thursday. It was on track to lose 1.5 percent on the week which saw a slide in oil prices and China-led global growth concerns continue to pummel risk assets globally.

The ECB managed to contain some of the pessimism for the time being after ECB President Mario Draghi hinted strongly on Thursday that more easing could be coming within months. Fading growth and inflation prospects will force the central bank to review its policy stance in March, Draghi said.

"Many economists believed he would avoid making specific comments about more policy action but as we pointed out, the 3-cent rise in the euro and decline in oil prices since December encourages the ECB head to be characteristically dovish," wrote Kathy Lien, managing director of FX strategy for BK Asset Management.

The euro slipped 0.2 percent to $1.0856. The common currency had fallen to an eight-month low of $1.0523 in December but has appreciated significantly because the ECB's easing decision that month fell far short of expectations.

The dollar was up 0.2 percent at 117.885 yen, pulling away from a one-year trough of 115.97 struck earlier this week against the safe-haven Japanese currency.

U.S. crude oil extended a rally made overnight after data showed stockpiles at some U.S. sites did not grow as much as forecast, providing participants in the battered market with an incentive to cover short positions.

The contracts were up 0.9 percent at $29.82 a barrel. U.S. crude fell to its lowest levels since 2003 earlier this week as the prospect of Iranian oil - following the lifting of international sanctions on Tehran - flooding a heavily saturated market dragged down prices.

(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)