(In 13th paragraph, corrects to say reflationary instead of
* MSCI Asia ex-Japan hits seven-week high
* Nikkei set for best April in 20 years
* Dollar up vs yen, euro capped by expectations of ECB rate
* European shares likely extend gains
By Chikako Mogi
TOKYO, April 30 (Reuters) - Asian shares advanced on Tuesday
with investor risk appetite bolstered by expectations for U.S.
Federal Reserve and the European Central Bank to continue with
growth-supportive monetary stimulus measures.
European stock markets were seen extending gains, with
financial spreadbetters predicting London's FTSE 100,
Paris's CAC-40 and Frankfurt's DAX would open
up as much as 0.6 percent. Benchmark index in Italy was
also set to open 0.5 percent higher, as investors welcome signs
of political stability.
U.S. stock futures were down 0.1 percent, hinting at
a subdued Wall Street open after the Standard & Poor's 500 Index
closed at a record high on Monday.
MSCI's broadest index of Asia-Pacific shares outside Japan
climbed as much as 1.1 percent to a seven-week
high, putting the index on course for a monthly rise of 2.3
Toru Yamamoto, chief strategist at Daiwa Securities in
Tokyo, wrote in a note to clients that with markets driven more
by national policies that fundamentals, the only focus for
investors should be government and central bank policies.
"While the music is playing, there may be no choice but to
keep dancing," he wrote.
Given a deteriorating European economy, the ECB is expected
to cut the euro zone's main interest rate by 25 basis points at
its meeting on Thursday, which could give global markets a lead.
"A key trigger next month could be interest rate cuts by
Europe's central bank," said Kim Hak-kyun, an analyst at KDB
Daewoo Securities in Seoul.
South Korean shares led the gains in Asia with a 1.3
percent rise to reach their highest levels in nearly four weeks.
China's markets have been closed since Monday for a national
holiday and will reopen on Thursday, while Hong Kong will close
on Wednesday and also reopen on Thursday.
The Australian benchmark share index jumped 1.1
percent to reach its highest in nearly five years, with
financials advancing after Australia and Zealand Banking Group
reported strong first-half earnings.
Japan's Nikkei stock average eased 0.1 percent,
undermined by weak earnings guidance from Fanuc Corp and Honda
Motor, but it was on track for its best April in 20
years. Japanese markets were closed on Monday for a holiday.
Expectations for aggressive reflationary policy in Japan has
led to a sharp weakening of the yen over recent months,
improving corporate sentiment among export driven manufacturers.
A more positive mood was reflected in economic indicators
released earlier on Tuesday.
A Markit/JMMA survey showed manufacturing activity in April
expanded at the fastest pace in just over a year. There were
also signs of a recovery in consumer sentiment, as household
spending rose 5.2 percent year-on-year in March, far outpacing
expectations for a 1.8 percent increase.
And, while industrial output grew more slowly than expected
at 0.2 percent in March from February, manufacturers expected
output to pick up to 0.8 percent in April.
The dollar was up 0.1 percent at 97.84 yen.
The dollar has retreated from a four-year high of 99.95 hit
earlier this month but has mostly stayed above 97 yen since the
Bank of Japan unveiled its unprecedented plan on April 4 to
double the monetary base in two years to achieve 2 percent
inflation in that time.
STOCKS BEAT GOLD
Spot gold fell 0.8 percent to $1,464.51 an ounce
after bargain hunting tapered off, with the lack of investor
confidence highlighted by daily outflows from exchange-traded
funds and surging stocks tempting investors to switch to
"Really what we need to see is a series of closes above
$1,505 to take the pressure off," said Tim Riddell, head of ANZ
Global Markets Research, Asia, adding that a drop below $1,435
could trigger a favoured technical pullback to $1,300 and
potentially even as deep as $1,245.
The euro inched up 0.1 percent to $1.3107, supported
by the formation of a government in Italy but capped by
expectations for an ECB rate cut.
The new government in Italy ended a two-month political
vacuum in the euro zone's third-largest economy. Relief helped
bring down Italy's five- and 10-year borrowing costs down to
their lowest level since October 2010 on Monday.
New Prime Minister Enrico Letta promised to push for a
change to Europe's focus on austerity and pursue growth.
In the United States, investors saw little reason for the
Fed to change its very accommodative stance at its two-day
meeting ending on Wednesday, as recent data has been mixed and
London copper steadied around $7,150 a tonne but
faced its biggest monthly loss in six months as a worsening
outlook for global growth drove investors to cut commodities
exposure, but expectations of more central bank easing curbed
U.S. crude was down 0.1 percent at 94.37 a barrel and
Brent eased 0.2 percent to $103.57.
(Additional reporting by Hyunjoo Jin in Seoul and Lewa
Pardomuan in Singapore; Editing by Simon Cameron-Moore)