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Euro Rallies despite Asia-Pacific Slowdown

admin — Sat, 03 Jul 2010 16:40:02 +0000

The super economy of China that has dragged the global economy out of recession is beginning to show signs of a consolidation. China’s Manufacturing PMI for June produced a disappointing 52.1, instead of the forecast 53.2. It seems measures to prevent the economy from over heating are beginning to show sign of fruition.

Once again risk aversion pushed higher yielding currencies lower with AUD/USD suffering a 100pip decline. The move was exacerbated by weaker Australian retail sales, and a disastrous decline by -6.6% in building approvals. The data demonstrates that the RBA’s interest rate cycle has reduced demand for property buyers. With the Australian economy softening and the real threat of a slowdown in China, trader’s expectation for further interest rate hikes have been lowered. AUD/USD hit a low of 0.83126 during Asian trade but has since recovered slightly and is once again testing the 0.84000 handle.

Surprisingly, and in contrast with Asia, news out of Europe has surpassed expectation inducing a Euro rally against the dollar back above 1.23000. Sentiment towards the region seems to have improved for the time being after Spain’s successful bond auction and an interest rate hike by Sweden’s Riksbank eased fears of the on-going debt crisis. Today’s good news from the region has comes after the ECB’s tender drew less demand indicating a healthier European banking system.

Key data out of the U.S is the ISM Manufacturing PMI, Unemployment Claims and Pending Home Sales. If these disappoint we could see the Euro gains reversed as traders seek safety in the U.S dollar.

Published on Thu, Jul 1 2010, 10:42 GMT

fxstreet.com

Asia’s Exceptions To The Global Tightening Trend

admin — Tue, 15 Jun 2010 09:59:54 +0000

Now that the global recession of 2008-09 is a thing of the past, most major economic blocs are mapping their own routes to a normal monetary and fiscal policy environment. Asian economies were the first to raise interest rates from ultra-loose levels, followed by fast-recovering export economies, commodity producers then major trade hubs. In general the global economy appears to be recovering from the financial crisis (and knee-deep in a new European-based one). However, policymakers in the second- and third-largest economies in the world suggest they will maintain loose policies and even expand their monetary largesse in the near future. Can the global economy be in great shape if Japan and China still need help?

First, let’s consider China. This morning the China Banking Regulatory Commission (CBRC) released its annual report in which it stated the global recovery would be “slow and tortuous.” This phrase quickly made its way through Asia’s markets and people quickly dove into the details of the CBRC’s analysis. The Commission (which is held in high regard throughout Asia) made its strongest statements to-date that the (domestic) real estate market bubble is particularly concerning, adding to this that bad loans based on speculative purchases are likely to rise over the next twelve months, bank losses will mount, and credit growth is at risk of being negatively impacted by imprudent behavior. These buzzwords all but state that in the government’s opinion, the economy is vulnerable to a market bubble bursting on its watch, and officials will not tolerate anything so disruptive to the Chinese economy.

Some of the other buzzwords mixed into the report included fears of “trade protectionism” and the “US dollar exchange rate,” and the placement of these key phrases informally suggests to US policymakers that the yuan will not be allowed to appreciate against the greenback any time soon. The balance of the 120+ page report all but sets the agenda for the People’s Bank of China. For the next year, lending levels need to be controlled (but not necessarily contained), interest rates will not rise any time soon, valuable development programs will not be cut back, and exchange rate stability should be maintained. In short, economic growth close to 12% a year will still get some stimulus throughout 2010. (Not surprisingly, the report did not discuss inflation prospects.)

Moving from one end of the spectrum to the other, let’s consider Japan. After its latest two-day meeting, the Bank of Japan (BoJ) today left its main policy rate unchanged at 0.10% – not surprising considering the weak state of the economy – and instated a “fund provisioning measure” to extend cheap credit toward productive economic endeavors. When credit markets locked up in September 2008, the Japanese economy was already all but in recession, therefore its fall sank deeper before production staged a modest recovery. Undermining this export-driven rebound, however, was the fact that capital formation has not recovered from its lowpoint in Q3 2009, domestic consumption remains sluggish, and the government has very little capacity to stimulate further growth. After a commodity-induced spate of inflation back in 2008, consumer prices fell the following year as deflation returned with a vengeance. The BoJ had little choice but to hold rates steady after its meeting and needs to find some way to inspire credit growth going forward if the country is to recover from its economic malaise. In short, the global recovery could very well leave the world’s second largest economy behind.

If consensus forecasts hold true for these two countries, this year China’s annual GDP will surpass Japan in terms of economic size and rank second only to the US. This is indeed an admirable achievement, but both sides should take heed of what lies ahead. For China, it needs to understand that historically, deflating an asset bubble is a difficult feat in the best of cases, and if poorly managed can be the beginning of even greater problems. The country is well-positioned to withstand a period of transition, but without the tough reforms it could easily follow the path Japan took in the wake of the 1990 Nikkei collapse. And as for Japan, it must withstand severe change in its economic structure, otherwise China will be the first of several economies surpassing it in generations to come.

Published on Tue, Jun 15 2010, 22:14 GMT

fxstreet.com

Asia stocks mixed before Fed statement; Europe up (AP)

admin — Mon, 15 Mar 2010 07:05:50 +0000

U.S. Federal Reserve
’s latest assessment of the world’s largest economy. European stocks gained in early trade.
It marked Asia’s third consecutive day of mediocre trade.
wallowed below $80 a barrel, while the dollar weakened against the yen and the euro.
U.S. central bank
wraps up its policy meeting later Tuesday. Widely expected to keep its key interest rate unchanged at near zero, the Fed will also deliver a policy statement that investors will pore over for clues about the economic recovery and its plans for interest rates.
In Asia, the
was also in focus.
at 0.1 percent Wednesday, though there’s growing speculation it will ease policy in other ways, possibly by expanding loan programs and other steps to keep money cheap and available as the world’s second-largest economy heals.
, markets were higher after the region’s
agreed to offer financial help for Greece, possibly in the form of bilateral loans, to help ease the country’s worsening debt crisis. They stopped short of divulging details.
As trading got started, markets in
and Germany added 0.6 percent, and France’s index rose 0.7 percent.
Earlier in Asia,
stock average fell 30.27 points, or 0.3 percent, to 10,721.71.
, the
lost 56.17, or 0.3 percent, to 21,022.93. South Korea’s Kospi was off 1.49, or 0.1 percent, to 1,648.01.
Elsewhere,
’s market rose 0.5 percent, Australia’s was up 0.3 percent and India’s Sensex gained 0.5 percent.
In currencies, the dollar slipped to 90.38 yen from 90.46 yen. The euro was higher at $1.3679 from $1.3673.
fell in Asia, with benchmark crude for April delivery down 20 cents at $79.60. The contract dropped $1.44 overnight.
were mixed, suggesting a lackluster open in U.S. markets, before the Fed statement.
For months, the Fed has promised to hold rates at historically low levels for an extended period, helping to revive economic growth by freeing up more money for companies and workers to spend.
Thomas Lam, a
OSK-DMG in Singapore, said the central bank was unlikely to substantially change that outlook for interest rates during Tuesday’s meeting.
That’s partly because recent economic gains have yet to translate into more people finding jobs, something the Fed will want to see before shifting its stance. Fed officials are also likely to start with smaller, less noticeable steps to drain extra money from the system before telegraphing their plans to hike rates.
“I don’t think there will be marked changes in the statement,” Lam said. “This isn’t the time yet. The environment still isn’t comfortable enough to change the rhetoric or policies.”
, the Dow rose 17.46, or 0.2 percent, to 10,642.15, its highest close since Jan. 19. It was the Dow’s 10th advance in 12 trading days.
& Poor’s 500 index rose 0.52, or 0.1 percent, to 1,150.51. The index is at its highest level since Oct. 1, 2008.

us.rd.yahoo.com

Asia stocks dip on China tightening fears, yen up

admin — Wed, 10 Mar 2010 08:09:34 +0000

Asia stocks dip on China tightening fears, yen up
(Reuters) – Asian stocks fell on Thursday as investors worried strong loan growth and quickening inflation in China would spur Beijing to tighten monetary policy sooner than expected, while the yen rebounded against major currencies.
European equities were set track Asia lower, with financial spreadbetters expecting Britain’s FTSE 100
, Germany’s DAX
to fall as much as 0.5 percent.
The MSCI index of Asian shares outside Japan .MIAPJ0000PUS shed 0.5 percent, retreating from a seven-week high touched before the release of the Chinese data, which showed stronger-than-expected growth in factory output and consumer inflation accelerating to a 16-month high.
Some economists said the central bank would probably not wait long before increasing banks’ required reserves for a third time this year and perhaps even raising interest rates.
Broader losses were limited, however, by the view that gradual policy tightening in China would do little to slow its robust growth and that Asia’s economic recovery remains on track.
Foreign buying of Asian stocks, particularly South Korea, Japan and India, continued unabated with data showing emerging market equity funds reported a third straight week of inflows.
shed as much as 0.8 percent as investors feared that strong loan growth in February could prompt the authorities to soak up more cash from the financial system. But the market later recouped its losses to stand slightly higher, as did the Hang Seng index
in Hong Kong.
China’s central bank drained a net 82 billion yuan from money markets this week by issuing large amounts of bills, as part of its efforts to head off economic overheating and asset bubbles.
“February new loans remained higher than the government intends it to be, so we expect another rise in bank reserve requirements to come very soon, almost certainly this month,” said Zheng Weigang, head of investment at Shanghai Securities.
“An interest rate hike will wait at least until the second quarter.”
Fears that China could tighten monetary policy have fueled risk aversion in recent weeks, alongside jitters over debt problems in some European countries.
Japan’s Nikkei average .N225 bucked the regional weakness, rising 0.9 percent as exporters such as Sony (
6758.T
) climbed on general weakness in the yen.
“Trading by foreign investors and funds backed by domestic individual investors is dominating the market now as Japanese institutional investors can’t really move actively because this month is the end of the business year in Japan,” said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.
“The focus will be on important events in Japan, the United States and Europe all happening next week, namely the Federal Reserve and the Bank of Japan policy review as well as Greece’s future plans.”
EU finance ministers meet on March 16 to discuss Greece’s debt problems and their exit strategies from fiscal stimulus worth hundreds of billions of euros to battle the global financial crisis.
The yen climbed after the Chinese data prompted investors to cut their long positions in higher-yielding currencies.
The dollar fell a fifth of a percent to 90.35 yen, having climbed as far as 90.83 on Wednesday, a two-week high.
But gains in the yen were expected to be limited after sources told Reuters that the Bank of Japan may ease monetary policy as early as next week as it remains under government pressure to help pull the country out of grinding deflation.
Data on Thursday showed the economy grew less than initially expected in the fourth quarter of 2009 and a broad gauge of price trends hit a record negative reading.
The euro dropped to 123.28 yen, while sterling eased to $1.4955 after an unexpected drop in British industrial production data for January released the previous day.
The Australian dollar took a knock after the Chinese data but later bounced on bets of further interest rate rises at home.
Gold regained some strength after falling to its weakest in nearly two weeks the previous day, while oil prices retreated 50 cents from an eight-week high hit on Wednesday.

feeds.reuters.com

Asia stocks dip on China tightening fears, yen up (Reuters)

admin — Wed, 10 Mar 2010 08:05:27 +0000

to tighten monetary policy sooner than expected, while the yen rebounded against major currencies.
European equities were set track Asia lower, with financial spreadbetters expecting Britain's FTSE 100 (.FTSE), Germany's DAX (.GDAXI) and France's CAC 40 (.FCHI) to fall as much as 0.5 percent.
(.MIAPJ0000PUS) shed 0.5 percent, retreating from a seven-week high touched before the release of the Chinese data, which showed stronger-than-expected growth in factory output and consumer inflation accelerating to a 16-month high.
Some economists said the central bank would probably not wait long before increasing banks' required reserves for a third time this year and perhaps even raising interest rates.
Broader losses were limited, however, by the view that gradual policy tightening in
would do little to slow its robust growth and that Asia's economic recovery remains on track.
Foreign buying of Asian stocks, particularly South Korea, Japan and
, continued unabated with data showing
funds reported a third straight week of inflows.
Shanghai stocks (.SSEC) shed as much as 0.8 percent as investors feared that strong loan growth in February could prompt the authorities to soak up more cash from the financial system. But the market later recouped its losses to stand slightly higher, as did the
(.HSI) in
.
drained a net 82 billion yuan from money markets this week by issuing large amounts of bills, as part of its efforts to head off economic overheating and asset bubbles.
“February new loans remained higher than the government intends it to be, so we expect another rise in bank
to come very soon, almost certainly this month,” said Zheng Weigang, head of investment at Shanghai Securities.
will wait at least until the second quarter.”
in recent weeks, alongside jitters over debt problems in some European countries.
's Nikkei average (.N225) bucked the regional weakness, rising 0.9 percent as exporters such as Sony (6758.T) climbed on general weakness in the yen.
can't really move actively because this month is the end of the business year in Japan,” said Tsuyoshi Segawa, an equity strategist at
.
“The focus will be on important events in Japan, the United States and
all happening next week, namely the
review as well as Greece's future plans.”
.
The yen climbed after the Chinese data prompted investors to cut their long positions in higher-yielding currencies.
The dollar fell a fifth of a percent to 90.35 yen, having climbed as far as 90.83 on Wednesday, a two-week high.
may ease monetary policy as early as next week as it remains under government pressure to help pull the country out of grinding deflation.
Data on Thursday showed the economy grew less than initially expected in the fourth quarter of 2009 and a broad gauge of price trends hit a record negative reading.
The euro dropped to 123.28 yen, while sterling eased to $1.4955 after an unexpected drop in British
for January released the previous day.
The Australian dollar took a knock after the Chinese data but later bounced on bets of further interest rate rises at home.
Gold regained some strength after falling to its weakest in nearly two weeks the previous day, while
retreated 50 cents from an eight-week high hit on Wednesday.

us.rd.yahoo.com

Prudential confirms to buy AIG Asia for $35.5 billion

admin — Sun, 28 Feb 2010 17:52:26 +0000

Prudential confirms to buy AIG Asia for $35.5 billion
PRU.L
AIG.N
) Asian life insurance arm for $35.5 billion, making it the undisputed foreign leader in one of the world’s fastest-growing financial services markets.
The acquisition of AIA will be funded by a rights issue of $21 billion including costs and fees, the biggest ever acquisition-related cash call, and by a $5 billion debt issue, Prudential said on Monday, confirming an earlier Reuters report.
The takeover of AIA will make Prudential Asia’s biggest foreign insurer overnight, boosting its exposure to soaring demand for financial services across the region as rapid economic growth lifts consumers’ spending power, and as growth at home declines.
“Transformational is an overused word, but this deal is truly transformational,” Prudential chief executive Tidjane Thiam told reporters.
The takeover will lift the proportion of Prudential’s new business profit generated in Asia to 60 percent from 44 percent, while roughly trebling its total Asian customer base to 30 million, the company said.
Investors and analysts said they needed to know more about the finances of AIA before they can judge whether the takeover justifies the rights issue, which will raise a sum close to Pru’s current market value of about $23 billion.
“Fifteen billion pounds is a huge amount and I would want to see more details of the kind of return profile and the timetable for that,” said one top ten Pru shareholder, speaking before Prudential confirmed the deal.
Prudential shares fell 11.5 percent to 533-1/2 pence by 1312 GMT against a slightly higher FTSE 100
. Five-year credit default swaps (CDS) on Prudential widened by around 30 basis points, meaning the cost of buying protection against a default of 10 million euros of Prudential debt over five years rose to around 110,000 euros from 80,000 euros.
Shares in AIG jumped as much as 12 percent in pre-market trade.
Analysts at brokerages Oriel and Panmure Gordon downgraded Prudential’s shares.
“It’s going to be enormously dilutive,” said ING analyst Kevin Ryan.
“No one knows exactly what AIA contains or how profitable it is, or how it overlaps with Pru’s existing businesses.”
The acquisition, which comes after an initial approach for AIA by Prudential fell through last year after the two sides failed to agree on price, marks the company’s first major transaction under the charismatic Thiam, who took over the top job in October.
It will allow AIG to repay part of a $182.3 billion government bailout it received at the height of the financial crisis two years ago. AIG had been preparing AIA for an initial public offering in Hong Kong before opting instead to sell to Prudential.
The Prudential cash call is underwritten by Credit Suisse, HSBC, and JP Morgan Cazenove, who are also acting as bookrunners.
The rights issue is expected to complete in June, and it is a “reasonable assumption” that the new shares will be offered at a discount of about 40 percent, Prudential’s Thiam said.
The Pru CEO said AIA’s price tag is equivalent to 1.69 times its embedded value, an insurance sector valuation measure which includes the present value of future profits, compared with a typical multiple of 1.7 to 1.8 for Asian insurers outside China.
Pru’s own shares currently value it at around one times embedded value, but its Asian business alone is closer to 1.7 times, Thiam said.
Thiam added that Prudential plans to keep its British division “for the foreseeable future,” dispelling speculation the business might be sold so the group can concentrate on Asia.
Earlier on Monday, British insurance-focused takeover vehicle Resolution said it was not in talks to buy Prudential’s UK arm, countering a weekend press report which said Pru might offload the unit to Resolution as a side-deal to the AIA takeover.

feeds.reuters.com

Asia shares up, banks shrug off China policy move

admin — Tue, 16 Feb 2010 22:33:40 +0000

Asia shares up, banks shrug off China policy move
Asian shares leapt to a three-week high on Wednesday, powered by financial and resource shares after investors bought commodities on a weaker dollar, while Hong Kong shares shrugged off China’s latest move to temper robust lending.
The Hang Seng rose 1.8 percent after a long Lunar New Year holiday break, with Chinese bank stocks such as Bank of China surging in reaction to Friday’s surprise hike in bank reserve requirements by Beijing as it tries to moderate credit growth and inflationary pressures.
The announcement, which came on the heels of a similar move last month and was earlier than expected, had rattled markets on Friday by raising investors’ fears that tighter policies in the world’s third-largest economy would be more aggressive than thought and may damage global growth.
By the time Hong Kong stocks opened on Wednesday much of the initial excitement appeared to have dissipated.
“It seems that the market has already factored in the reserve ratio requirement increases,” said Castor Pang, research director at Cinda International. “The Hang Seng and the A share market have dropped too much recently.”
Shanghai markets remain shut this week.
Shares in Europe were set to extend gains, with Britain’s FTSE 100 to open up as much as 0.6 percent and France’s CAC to open up as much as 0.9 percent, financial bookmakers said.
Japan’s benchmark Nikkei average gained 2.7 percent for its biggest one-day percentage gain since December 3, but trading volume was one of the thinnest this year, with market players unsure how long the rebound will last.
The MSCI index of Asian shares outside Japan rose 1.8 percent, touching its highest level in three weeks.
Resource shares gained after copper led a rally across the broader base metals complex on Tuesday as the dollar stumbled and as equities markets recovered from a sell-off in recent weeks that was triggered by growing debt problems in Greece and fears that the global economic recovery was losing momentum.
U.S. stocks posted gains of as much as 1.8 percent overnight as traders returned from a three-day break, helped by strong New York State factory data and gains in Europe, where shares were buoyed by upbeat results from UK bank Barclays.
“There’s a bit more of a shift to riskier assets, especially those linked to commodities, and this may continue for a day or two,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management in Tokyo.
“There’s no question that the U.S. economy is improving, especially if you look at indicators, although this does raise the question of when we could expect an interest rate hike.”
Toyota Motor was flat after U.S. regulators opened an investigation into whether it had acted in a timely way to recall cars for acceleration problems. The automaker also moved to slow its U.S. production.
In Seoul, shares rose 1.7 percent as the U.S. data fueled foreign buying of financial and technology stocks, but a fall in the dollar and strengthening in the won limited gains in Hyundai Motor and other exporters.
In the afternoon, South Korea’s foreign exchange authorities were buying dollars to curb the won’s strength.
Australian stocks rallied 2.2 percent, the biggest one-day gain in two-and-a-half months.
Top miners BHP Billiton and Rio Tinto climbed 2.1 and 3.3 percent respectively as investors eyeing strong growth in Asia piled into industrial metals.
The dollar index, a gauge of its strength against six other major currencies, was unchanged from late U.S. levels after shedding 0.8 percent the previous session and hitting its lowest level in a week. It was the biggest one-day fall since November.
The euro held steady after surging 1.3 percent against the dollar on Tuesday. Investors were still cautious, however, wary that Greece’s debt problems have yet to be solved, and the euro remains highly sensitive to more negative fiscal news.
It was trading at $1.3769, steady on the day and well above last week’s nine-month low of $1.3532.
Gold prices steadied near two-week highs, with spot gold at $1,119 an ounce.
U.S. crude futures edged higher above $77 a barrel.
in TOKYO,

feeds.reuters.com

Asia markets jump after US gains on housing report (AP)

admin — Tue, 02 Feb 2010 21:59:11 +0000

jumped Wednesday, following
higher after encouraging reports about the beleaguered U.S. housing sector helped restore confidence in an economic recovery.
Several bourses shot up more than 2 percent after the U.S. market, reversing last month’s slide, posted its biggest back-to-back gains in almost three months.
gained modestly after surging the day before, while the dollar climbed against the yen and weakened against the euro.
Investors found reason for optimism after a major U.S.
group said its index of pending home sales rose in December. It was the ninth improvement in 10 months and further evidence of healing in an industry at the root of America’s downturn.
Having sent markets tumbling over last couple weeks, investors have upped their buying recently amid new signs of a U.S. economic revival and stronger global manufacturing that eased worries, at least for now, about the recovery going off track.
“The overall improvement in the U.S. economy is a clear indicator the world is recovering,” said Lucinda Chan, division director and Macquarie Private Wealth in Sydney. “It’s not going to be a smooth ride the whole way through, but we’re still expecting a solid performance long-term in the market given the improvements in the economy.”
stock average added 33.24 points, or 0.3 percent, to 10,404.33 and
jumped 449.90, or 2.2 percent, to 20,722.08. South Korea’s Kospi was up 19.21, or 1.2 percent, to 1,615.02.
Elsewhere, Shanghai’s market marched 2.4 percent higher, Australian stocks rose 0.9 percent and Indian shares bounced 2.4 percent.
Among stocks, shares in Toyota tanked nearly 6 percent as fallout from its global recall over faulty gas pedals continued with a top U.S. official accusing the world’s largest car maker of dragging its feet on safety concerns. Toyota will be in focus Thursday when it releases quarterly earnings.
Despite the upward swing, analyst said many investors were on edge ahead of U.S. private-sector employment data being released later in the day and the more important nationwide monthly jobs report due Friday. Wednesday’s report is expected to show employers slashed about 30,000
jobs last month compared to the 84,000 cut in December, according to analyst estimates.
Adding to anxiety were deteriorating finances in Greece and other Western countries. Investors will be watching Wednesday for the European Commission’s assessment of Greece’s plan to put its fiscal house in order and cut its
, already more than four times the
’s 3 percent of GDP limit.
In Asia, a hesitancy to put more money into the market before the extended Chinese New Year holiday also sidelines investors.
“Investors are being cautious. We’re still not past all the negative sentiment,” said Jackson Wong,
at Tanrich Securities. “Last year was a great year so many people would like to take some profits of the table.”
suggested a higher open in the U.S Tuesday. S&P futures rose 1.3, or 0.1 percent, to 1,098.50.
In New York Tuesday, the Dow rose 111.32, or 1.1 percent, to 10,296.85.
rose 14.13, or 1.3 percent, to 1,103.32, while
advanced 18.86, or 0.9 percent, to 2,190.06.
rose in Asia, with benchmark crude for March delivery up 30 cents at $77.53. The contract jumped more than $2 overnight on reports crude demand could improve.
In currencies, the dollar rose to 90.45 yen from 90.36 yen. The euro was higher at $1.3972 from $1.3961.

us.rd.yahoo.com

Oil reaches two-week high as optimism boosts Asia markets

admin — Tue, 02 Feb 2010 20:38:35 +0000

SINGAPORE (Reuters) – Oil bounced back above $77 on Wednesday, reaching its highest level in almost two weeks, as recovery optimism drove Asian stock markets higher, led by China.
U.S. crude for March delivery touched $77.66 a barrel, the highest price since January 21, and was trading up 22 cents at $77.45 at 0758 GMT (2:58 a.m. EST). On Tuesday it soared 3.8 percent, the biggest gain for a front-month contract since September 30. London ICE Brent crude for March rose 26 cents to $76.32.
MSCI’s Asia ex-Japan resources and energy indexes both rose 2.5 percent on the back of firmer commodity prices, and were the biggest contributors to the broader rise in Asian shares.
“We’ve had several months of indicators that suggest that economic expansion is under way, and this is likely to translate into higher oil demand for industrialized countries,” said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.
Shares in Chinese oil and gas producer CNOOC rose as much as 11 percent after the company issued 2010 production forecasts that exceeded expectations.
Prices had slipped earlier after an industry report showed U.S. crude inventories rose more than expected, damping optimism of a recovery in demand.
Crude stocks jumped by 4.7 million barrels last week, the American Petroleum Institute (API) said in a report late on Tuesday. That compared to an average forecast gain of 200,000-barrel in a Reuters poll.
“The U.S. is still showing weak demand figures,” “If we see new disappointing numbers, we could see the price increase slow down,” Graber said, referring to government oil inventory and demand data to be published later on Wednesday.
The price of crude is still nearly 48 percent below its July 2008 high of more than $147 a barrel.
U.S. equities rose for a second day on Tuesday after positive earnings reports from economic bellwether companies United Parcel Service and Emerson Electric. A rise in pending home sales also helped bolster stocks. .N
Monday’s news that the Institute for Supply Management’s index rose to its highest since August 2004 raised expectations for a strong recovery in U.S. manufacturing.
“If we see overall oil demand in the U.S. improve, and that oil product inventories are being worked off, that would be a positive signal for the market,” Graber said.
The API said gasoline stocks fell 1.2 million barrels and distillate stocks shed 1 million barrels.The government’s Energy Information Administration (EIA) will release stockpile and demand statistics on Wednesday at 1630 GMT (11:30 a.m. EST).
U.S. crude fell below $73 a barrel on Friday, shedding more than $11 from a 15-month high of almost $84 on January 11.
“The correction that we saw was really in line with the drop in risk appetite across markets,” Graber said. “With the global economic recovery on track, the positive fundamentals for specific commodity markets should be of more importance.”
U.S. gasoline stocks were forecast to have risen by 1.3 million barrels in the week to January 29 and total distillate stocks, including heating oil and diesel, were projected to have fallen 1.1 million barrels.
Weekly throughput at Japanese refineries declined last week for the first time in five weeks, industry data showed on Wednesday, as milder winter weather weakened heating-fuel demand.

feeds.reuters.com

Asia shares rise on U.S. cues

admin — Tue, 02 Feb 2010 17:56:33 +0000

Asia shares rise on U.S. cues
SINGAPORE (Reuters) – Asian shares powered ahead on Wednesday with energy and resources stocks leading the way, as demand for riskier assets increased after Wall Street rallied on upbeat U.S. earnings and economic data.
European stocks were set to gain for a fourth straight session on strength in Asian and U.S. markets, with investors awaiting the European Commission’s assessment of Greece’s deficit cutting plan and the U.S. ADP employment report later in the day.
U.S. stock futures also pointed to a slightly firmer open after Wall Street posted two days of strong gains on encouraging economic data, which have helped dispel fears in recent weeks that America’s economic recovery may be running out of steam.
Rising sales of previously owned U.S. homes and robust earnings from U.S. bellwethers in the consumer and industrial sectors pointed to a steady rebound in demand, fuelling gains of as much as 1.3 percent in key U.S. stock indexes overnight.
But some analysts cautioned against predicting a strong run in Asian stocks despite the appearance of more appetite for risk.
While companies overall had been beating earnings estimates, not a lot of upgrades had been forthcoming, said Andrew Orchard, strategist at Royal Bank of Scotland in Hong Kong.
“We see it as a year of volatility, a year of consolidation with maybe single digit returns between the positive and the negative,” said Orchard.
“Of course between the months you could see a few weeks of rallies, a few weeks of sustained falls, but overall we think it won’t be too different from where we began the year.”
Other analysts have echoed that view, noting that the global recovery and thus corporate earnings could be choppy.
Japan’s Nikkei stock average edged up 0.3 percent, with rises by exporters on the strong U.S. data offsetting declines for Toyota Motor Corp, whose U.S. sales slid 16 percent after its massive vehicle recall.
Fears of an extended sales slump pushed Toyota down 5.7 percent. Toyota has now lost nearly 20 percent of its market value since its recall was announced on January 21.
All eyes will be on the automaker when it announces third-quarter results on Thursday and how the recall will affect its 2010 earnings forecasts.
Asia Pacific stocks outside Japan as measured by MSCI rose 1.9 percent, climbing further away from 3-month lows. The index is down about 4 percent so far this year, after a 68 percent surge in 2009.
MSCI’s Asia ex-Japan resources and energy indexes both rose 2.5 percent on the back of firmer commodity prices, and were the biggest contributors to the broader rise in Asian shares.
Shanghai copper rose 2 percent on Wednesday and London metal extended gains as the latest batch of U.S. data helped soothe jangled investor nerves.
Top Australian miners had been sold down over the past few weeks on worries about moves by China, their biggest customer, to rein in bank lending. But signs of a sustainable global recovery have lured investors back into resources stocks.
“At the end of the day demand for commodities will remain reasonably robust. I don’t see anything that’s happened to derail that theory,” said David Spry, research manager at broker FW Holst.
Global miner BHP Billiton rose 2.6 percent, helping lift the broader Australian market by 0.9 percent.
The U.S. dollar steadied after slipping from six-month highs against a basket of currencies as investors moved back into higher-yielding, growth-linked currencies as global markets settled down.
The dollar index hovered around the 79 mark, after retreating from a six-month high of 79.547 struck on January 31.
The Australian dollar was at $0.8848, bouncing from a low of $0.8780 on Tuesday and recovering some of the losses suffered when the Reserve Bank of Australia left its benchmark rate unchanged at 3.75 percent, defying expectations of a rate hike.
The euro held on to gains made on Tuesday, trading around $1.3953 in Asia, as investors awaiting the EC’s verdict on Athens’ plan to cut its burgeoning deficit.
The EC is widely expected to endorse the proposal, but its assessment will be closely watched by financial markets as they weigh Greece’s credibility as a debtor.
Greece’s fiscal problems have fueled selling in the euro this year, with concerns that other countries in the bloc also face problems.
U.S. crude oil futures were little changed at around $77.19 a barrel after an industry report showed a bigger than expected build in U.S. crude oil stockpiles last week.
Gold prices were steady at around $1,114.65 per ounce after hitting their highest level in almost two weeks the previous day, with investors cautiously awaiting U.S. jobs data later this week to gauge prospects for the U.S. economy and the dollar.
The U.S. ADP employment report due later on Wednesday could give some clues to the closely watched non-farm payrolls report on Friday. Policymakers fear consumer demand will not rebound decisively until unemployment figures begin to come down.

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