Asian shares near five-and-a-half month highs on oil's rally

By Hideyuki Sano and Shinichi Saoshiro

TOKYO (Reuters) - Asian shares reached a 5-1/2-month high on Thursday as oil prices rallied over 4 percent overnight thanks to a smaller than expected increase in U.S. crude inventories and abiding hopes that producers may eventually agree ways to ease a global glut.

Spreadbetters expect the positive momentum in Asia to trickle to Europe, forecasting a higher open for Britain's FTSE, Germany's DAX and France's CAC.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent, brushing its highest since early November. Japan's Nikkei gained 2.6 percent. Australian shares rose 0.9 percent and Hong Kong's Hang Seng added 1.8 percent. Shanghai rose 0.4 percent.

Wall Street shares ended less than 2 percent short of a record-high close on Wednesday as a rebound in oil prices added to optimism sparked by a raft of earnings reports.

The S&P 500 gained 0.08 percent to 2,102.4, and had gained 15 percent since mid-February.

Oil prices surged on Wednesday and eventually popped up to a five-month high after a smaller-than-expected build in U.S. crude inventories offset oversupply worries stirred by Kuwaiti oil workers strike ending a strike.

Oil bulls also bet that major crude producers would meet again to try to curtail output even as Moscow denied media reports that Russia planned to host such a meeting.

Last Sunday, Russia and OPEC nations had failed to reach an agreement on freezing production at a meeting in Doha, Qatar.

"Despite the denial from Russia, oil prices were strong, pointing to strong market sentiment. I suspect there is speculation that oil producers will eventually agree on an output freeze," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

U.S. crude rose above $44 a barrel to touch their highest since November. Brent crude poked above $46 for their highest in five months.

Many other commodity prices were also firm, with copper rising to as high as $4,994.50 a tonne, its highest level in a month.

The Thomson Reuters Core Commodity Index also rose above its March peak to its highest level since early December.

Silver extended gains after Tuesday's sharp gains to hit an 11-month high of $17.397 per ounce. It last traded at $17.256, up about 5 percent so far this week.

In contrast, safe-haven gold stayed in its well-worn $1,210-1,280 range since February and last stood at $1,247.36 per ounce, up 1.2 percent on the week.

In the currency market, commodity-linked currencies held firm. The Canadian dollar hit a 9-1/2-month high of C$1.2593 to the U.S. dollar. It last stood at C$1.2643.

The Australian dollar was at $0.7807, having hit an 11-month high of a $0.7830 on Wednesday.

Against other currencies, the U.S. dollar maintained a firm tone overall, and held an upper hand against the euro ahead of the European Central Bank's policy meeting later in the day.

ECB President Mario Draghi is likely to drive home the case for ultra-loose monetary policy on Thursday, hitting back after a barrage of criticism from German officials who dispute the bank's recipe for tackling the euro zone's economic malaise.

"The task now for the ECB lies more along the lines of promoting the effectiveness of these new expansionary policies and assertion that the Bank can do more if needed," said Rodrigo Catril, FX strategist at National Australia Bank.

The euro traded nearly flat at $1.1291, having fallen 0.5 percent on Wednesday.

Against the yen, the dollar nudged up to a two-week high of 109.90 yen.

(Additional reporting by Ian Chua in Sydney; Editing by Simon Cameron-Moore & Shri Navaratnam)