TOKYO, Nov 29 (Reuters) - Asian shares touched their highest
levels in more than three weeks and commodities rose on Thursday
as sentiment improved after a senior U.S. lawmaker said he was
"optimistic" on reaching a budget deal before the end of the
year to avoid a fiscal crisis.
European shares will likely extend gains seen in the
previous session, with financial spreadbetters predicting
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX will open up as much as 0.4 percent.
A 0.4 percent climb in U.S. stock futures also
hinted at a solid Wall Street open.
MSCI's broadest index of Asia-Pacific shares outside Japan
surged 1 percent, after ending a seven-day
winning streak on Wednesday with a 0.3 percent drop.
Japan's Nikkei stock average also advanced 1
percent, rebounding from the previous session's one-week closing
low on optimism over the U.S. budget talks and a weaker yen.
The dollar inched up 0.1 percent to 82.17 yen.
Australian shares added 0.7 percent to three-week
highs, supported by banks and gains in global miner Rio Tinto
after its upbeat outlook on China and cost-cutting
pledges. Shanghai shares rebounded from their lowest
levels since January 2009 hit the previous day.
Market gains were subdued, however, with moves largely
attributed to position adjustments ahead of year-end
bookclosing, as investors were reluctant to make bets given a
lack of clarity on the prospects for U.S. budget talks as well
as global growth.
"There is less negative news but there are also few
decisively positive news, leaving investors rotating in and out
of assets which have been overbought or battered, but basically
keeping their positions more or less neutral in whatever assets
they have," said Yuuki Sakurai, chief executive of Fukoku
"Whether it's the U.S. fiscal cliff or the euro zone debt
crisis, it's the same process of muddling through, taking three
steps forward and two steps backward, but nevertheless making
progress, so that's helping ease concerns of sharp downside
risks and keeping markets in ranges," he said.
U.S. equities jumped overnight after U.S. House of
Representatives Speaker John Boehner voiced optimism that
Republicans could broker a deal with the White House to avoid
year-end austerity measures.
President Barack Obama later said he hoped an agreement can
be reached before Christmas to avoid a "fiscal cliff" of tax
increases and spending cuts worth $600 billion due to start in
the new year and aimed at shrinking the budget deficit.
Market players remain wary of a lack of specifics on how the
two major political parties plan to arrive at a compromise.
But sentiment has tended to improve on positive comments,
reflecting nervousness that if U.S. lawmakers fail to strike a
deal, they risk pushing the U.S. economy into recession and
dragging down global growth.
The U.S. economy remains on a moderate recovery trend with
modest hiring and a fragile housing market.
NO CLEAR TREND
Asia's growth prospects remain mixed, with economies such as
Indonesia and the Philippines underpinned by healthy domestic
demand and government spending while others such as South Korea
and Japan are dragged down by sluggish domestic demand and
A key South Korean manufacturing business survey showed on
Thursday its index for December fell to match a more than 3-year
low, with companies citing economic uncertainties.
China's economy appears to have emerged from its lows but
the outlook is uncertain.
"It's not the best time to be making big positional changes
now. Most investors are waiting for policy guidance on the
structural reforms the Chinese leadership has been talking a lot
about," said Alan Lam, Julius Baer's Greater China equity
"With the United States, Japan and the euro zone focused on
spending cuts, and China's patchy success in turning domestic
consumption into the main driver of its economy, the global
economy may find it tough to muster momentum," said Thomas Lam,
chief economist at DMG & Partners Securities.
"If that's the case, then that's probably going to hold back
any substantial increase in demand for metals or other
commodities," he added.
The euro was steady around $1.2954 after peaking at
$1.3010 on Tuesday, its highest level since Oct. 31, on news of
a deal on Greece's debt reduction plan paved the way for further
aid to prevent Athens' from an imminent default.
U.S. crude futures rose 0.4 percent to $86.86 a
barrel and Brent inched up 0.3 percent to $109.82.
Spot gold steadied around $1,720.06 an ounce after
slumping 1.5 percent on Wednesday for its biggest one-day drop
in nearly a month when deflation worries related to a U.S.
fiscal crisis and debt-stricken Greece triggered a heavy bout of
stop-loss orders from momentum-driven fund investors.
But investment interest remained high, as illustrated by
holdings of the SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, hitting a record high for a
second consecutive day at 1,347.018 tonnes on Nov. 28.
"Generally, people are still pretty bullish on gold and last
night was just a one-off correction, nothing extraordinary,"
said a Singapore-based trader, adding that $1,650-$1,700 would
be a good buying level.
Investors were cautiously bullish in Asian credit markets,
tightening the spreads on the iTraxx Asia ex-Japan
investment-grade index by 1 basis point.