GLOBAL MARKETS
Asian stocks rise as dollar holds its ground
By Tom Miles
Reuters
First Posted 11:32:00 05/16/2008
HONG KONG -- Asian stocks rose cautiously on Friday as the dollar steadied against the yen and oil prices hovered below record highs, offering a rare lull in the market's gyrations.
Most stock markets across Asia were modestly higher, but Sydney's main index surged back towards the 6,000 mark, last glimpsed in February, as top miner BHP Billiton jumped, propelled by speculation of Chinese interest in the firm.
Japan's Nikkei average was up 0.2 percent by 0300 GMT, while MSCI's index of other Asian stock markets was up 0.9 percent, driven by a 1.3 percent rise in Sydney's benchmark.
Global stocks festered at the start of this year as worries about the credit crisis and the state of the US economy corroded profits and rattled banks. But Wall Street's fear has subsided and Thursday brought the CBOE Volatility Index to its lowest close since October and the S&P 500 and Nasdaq to their highest closing levels since early January.
US equities were helped by a pull-back in oil prices, which eased concerns about inflation, and a battle to control Yahoo Inc. that helped the tech sector.
The US tech rally offered little comfort to South Korean tech firms such as LG Display, which shed 7.0 percent after Lehman Brothers said its profitability had already peaked and would not improve in the rest of 2008.
Other tech stocks retrenched after historic highs in the previous session but Seoul's main index still managed to rise 0.3 percent to a 2008 peak.
"Stronger than expected earnings from Wall Street and easing worries about the credit crisis are fuelling the market's upward momentum," said Won Jong-hyuk, a market analyst at SK Securities.
"The index could hit its historical high of 2,085 again by the second half of this year. But we are likely to see some volatile patches along the way," Won added.
Taiwanese stocks got an extra fillip as investors savoured the prospect of improved ties with China after President-elect Ma Ying-jeou takes office next week. The main TAIEX index rose 0.6 percent to its highest level this year.
QUAKE FUELS OIL
Asian exporters such as Honda Motor Co., which rose 3.0 percent, are benefiting from a renewed confidence in the dollar, which held steady at around 104.65 yen despite the latest rash of ugly US economic data. It inched down against the euro following stronger-than-expected euro area first quarter growth data.
Reports from the US Federal Reserve on Thursday showed factory activity in the mid-Atlantic region shrinking for a sixth straight month in May and New York state's manufacturing declining.
"The US data raised concerns about growth while euro zone data suggested the region's economy is still more solid than the US," said a senior dealer at a European bank.
"Major currencies are likely to be confined to narrow ranges as players are still unsure of what to focus on, and with positions largely brought back to neutral after recent adjustments," he said.
Neither the dollar's strength nor the weak US data were enough to put a serious dent in oil prices. US crude oil firmed towards $125 a barrel after a volatile Thursday, when a big rise in US natural gas inventories triggered a $5 plunge and a $3 bounce in crude prices.
Prices remained firm on Friday as Chinese demand for heating oil and diesel following Monday's devastating earthquake stretched supplies of refined products, with Chinese oil firm PetroChina seen buying a third more diesel in June than in May.
"Global supply of distillates is very tight," said Tetsu Emori, fund manager at Astmax Co. Ltd. in Tokyo.
NYMEX heating oil was up 0.181 cents, a whisker below Wednesday's record high of $3.7228.
Oil markets may get a fresh impetus as US President George W. Bush heads for Saudi Arabia on Friday to renew his appeal to help tame record oil prices and try to shore up Arab support to contain Iran's growing regional clout.
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