GLOBAL MARKETS-Asia stocks gain as oil bounce improves sentiment, ECB awaited – Reuters

8 months ago Comments Off on GLOBAL MARKETS-Asia stocks gain as oil bounce improves sentiment, ECB awaited – Reuters

* MSCI Asia-Pacific index up 0.3 pct, Nikkei gains 1.3 pct

* Spreadbetters expect slightly higher open for European

* Oil rally, prospect of more ECB easing help shore up

* Better risk appetite lifts dollar vs yen, euro dips before

* Kiwi hit by surprise rate cut, oil rally lifts

* Large US gasoline drawdown boosts crude oil

By Shinichi Saoshiro

TOKYO, March 10 Asian stocks edged up on
Thursday, encouraged by a rally in crude oil prices and
expectations that the European Central Bank will ease policy
later in the day, emulating policymakers elsewhere seeking to
bolster their struggling economies.

“The euro’s weakness is indicating something positive out of
the ECB meeting, so the market may rise further in the
afternoon,” said Hiroaki Mino, director of investment
information department at Mizuho Securities in Tokyo.

MSCI’s broadest index of Asia-Pacific shares outside Japan
nudged up 0.3 percent. Volatile Shanghai stocks
, however, dropped 0.6 percent after
stronger-than-expected local inflation data was interpreted as a
negative for the struggling economy.

South Korea’s KOSPI rose 0.8 percent and Hong Kong’s
Hang Seng gained 0.6 percent. Japan’s Nikkei
climbed 1.3 percent.

Spreadbetters expected modestly higher opens for Britain’s
FTSE, Germany’s DAX and France’s CAC.

The focus was on how much the ECB, which had already cut
rates into negative territory, would ease.

“The ECB is tonight widely expected to increase the amount
of securities it buys from the market each month, as well as
moving interest rates further into negative territory,” wrote
Michael McCarthy, chief market strategist at CMC Markets.

“However, there are also market discussions around the idea
that the ECB may be pushing on a piece of string, and that any
stimulatory impacts of negative rates is overwhelmed by the
signalling effect that Europe is in crisis.”

Euro zone government bond yields and short-term interest
rates fell earlier this week after weak Chinese trade data
further enhanced worries about the health of the global economy.

But after the ECB failed to meet the markets’ high
expectations in December, traders remain wary about another
disappointing outcome.


The big surprise in Asia on Thursday came from New Zealand’s
central bank, which cut the benchmark cash rate to a record low
2.25 percent.

Reserve Bank of New Zealand Governor Graeme Wheeler cited
China as a major risk to the bank’s outlook for economic growth
and inflation, reflecting global concerns over a slowdown in the
world’s second-biggest economy.

“If China had a very significant and prolonged devaluation,
it would in essence spread deflation around the world,” Wheeler
told reporters, adding that China was building up a number of
serious imbalances.

In recent months, gloom over China, tumbling commodity
prices and deflationary pressures have prompted aggressive
easing by central banks, including a move to negative rates by
the Bank of Japan in January.

In currencies, the euro dipped 0.3 percent to $1.0977
with a wait-and-see mood ahead of the ECB decision limiting

The dollar rose 0.3 percent to 113.68 yen against the
safe-haven Japanese currency as equity and commodity market
gains improved risk appetite.

The New Zealand dollar was a much bigger mover after the
RBNZ’s unexpected rate cut. The kiwi hit a one-week low of
$0.6618 after sliding well over 1 percent following the RBNZ’s
rate cut.

Oil prices stood tall after surging overnight after a large
U.S. gasoline inventory drawdown amid improving demand
overshadowed growing record high crude stockpiles.

Speculation that top oil producers might agree soon to an
output freeze also supported crude prices. U.S. crude futures
was at $38.24 a barrel, having surged nearly 5 percent to
hit a three-month high of $38.51 on Wednesday.

The bounce in crude oil and the Bank of Canada’s decision on
Wednesday to refrain from cutting interest rates boosted the
Canadian dollar, which hovered near a four-month high of
C$1.3230 per dollar.

(Additional reporting by Ayai Tomisawa in Tokyo, Rebecca Howard
and Jane Wardell in Wellington; Editing by Simon Cameron-Moore)

GLOBAL MARKETS-Asia stocks gain as oil bounce improves sentiment, ECB awaited – Reuters}