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Asian shares gain as U.S. recovery momentum instills optimism

Source : REUTERS
Last Updated: Wed, Mar 27, 2013 04:57 hrs

By Chikako Mogi

TOKYO (Reuters) - Asian shares rose on Wednesday as positive U.S. data pointing to a moderate recovery in the economy offered comfort, while the euro eased on worries over the consequences of the Cyprus bank bailout deal which inflicts huge losses on wealthier depositors.

Investors shifting money to chase higher premiums on risk assets such as stocks kept a lid on safe-haven bullion, keeping spot gold capped below $1,600 an ounce, barely holding above its 14-day moving average.

The defensive euro underpinned the dollar against a basket of major currencies, which was not far from a 7-1/2-month peak of 83.166 set earlier this month. The U.S. currency rose 0.3 percent against the yen to 94.74 on expectations of stronger monetary stimulus under new central bank leadership ahead of the Bank of Japan's policy meeting next week.

Data on Tuesday showed demand for U.S.-made durable goods surged in February, suggesting factory activity continued to expand.

U.S. single-family home prices started the year with the biggest annual increase since June 2006, according to a separate report.

The Conference Board industry group, however, said consumer confidence tumbled in March as Americans turned more pessimistic about short-term economic prospects, but stock markets focused on the good news, taking the Dow Jones industrial average to a record closing high and the Standard & Poor's 500 Index to just below a record closing peak.

"Sentiment is not at all weak and the U.S. is clearly leading the markets higher," said Tetsuro Ii, the chief executive of Commons Asset Management, in Tokyo.

"Europe will likely remain in doldrums but the U.S. is recovering and China is also expected to keep its economy going under the new leadership," he said.

The MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.5 percent to a one-week high.

Australian shares added 0.6 percent led by blue chip miners on strong resource prices and solid U.S. stock performances. Chinese shares were also higher and Southeast Asian bourses saw inflows continuing.

Japan's Nikkei stock average was nearly flat in choppy trading after many shares went ex-dividend, offsetting the boost to sentiment from Wall Street's data-led gains.

Ii said investors were beginning to turn to factors other than the BOJ's monetary policy to justify buying Japanese stocks, such as betting on deregulation that will help spur growth in Japan and how the yen's weakness and the Nikkei's rises over the past months will be reflected in corporate earnings when they start reporting in late April.

CYPRUS, THE DESTABILISER

The Cyprus rescue scheme averted an imminent banking collapse but the measure requiring bank bondholders and large depositors to take heavy losses raised concerns, notably the risk of this model being used in the future and spurring a run on banks in other euro zone countries with much larger banking systems than Cyprus's.

The island state is expected to complete capital control measures on Wednesday to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders.

Worries about Cyprus weighed on some Asian stock sectors.

"The reason why financials are slightly down is because we saw European political instability with regards to the fact that the Cyprus deal could be a model rather than the exception," said Evan Lucas, market strategist at IG Markets, of Australian shares.

Toshihiko Matsuno, a senior strategist at SMBC Friend Securities, said investor sentiment remained positive for the Nikkei, but added: "In terms of global market news, there is a mix of both positives and negatives, so most investors may stay on the sidelines for now."

The euro eased 0.1 percent to $1.2853, hovering near a four-month low of $1.2828 touched on Tuesday, and capped by its 200-day moving average of around $1.2880. The euro closed below the key technical level on Monday for the first time since November.

U.S. crude futures eased 0.2 percent to $96.17 a barrel and Brent was nearly unchanged at $109.33.

(Additional reporting by Thuy Ong in Sydney and Ayai Tomisawa in Tokyo; Editing by Jacqueline Wong)




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