Higher oil and metals boost Asia

TOKYO, June 26 – Asian share markets rose on Friday as higher oil and metals prices boosted resource stocks, while the dollar fell on lower US yields and as investors gingerly shifted some funds back into riskier assets.

In Europe, shares were set to rise with resource stocks also poised to gain, while Swiss lender UBS AG said it planned to raise about 3.8 billion Swiss francs ($3.48 billion) by selling shares and expected to post a second-quarter net loss.

US crude oil futures pushed on above $70 a barrel on renewed rebel attacks against oil facilities in Nigeria and worries that a glitch at the largest US oil refinery may tighten gasoline stockpiles.

The MSCI index of Asian stocks excluding Japan climbed 1.4 per cent to 322.60, although it remains below the eight-month highs scaled at the start of June, while Japan’s Nikkei ended up 0.8 per cent.

The Nikkei has risen 11 per cent since the start of the year but is still down 29 per cent from a year ago, while the MSCI ex-Japan is up 30 per cent so far this year but down 27 per cent on a year ago.

Australian shares jumped 1.2 per cent, lifted by oil producers, banks and Qantas Airways after it cut and deferred orders of Boeing Co Dreamliner aircraft in a cost-saving move.

”The tone of the market is reasonable, people are prepared to buy on the dips ... but it is also hard to see the market roaring ahead,” said David Spry, research manager at FW Holst in Melbourne.

Japan’s Nippon Oil rose 3 per cent after a newspaper reported that it and other Japanese companies were in the final stage of talks with Iraq to win the development contract for Iraq’s huge Nassiriya oilfield.

Suzuki Motor climbed 5.5 per cent after a source familiar with the matter said Volkswagen was exploring a potential cooperation deal with Suzuki as a way to boost its expertise in the area of ultra-small cars.

A climb on Wall Street supported Asian shares, although S&P futures eased on Friday indicating a soft start later.

Share markets have been in retreat in the past two weeks as investors paused to work out if a rally in place since March has run out of steam, as economies around the world struggle.

Elsewhere in the region, Singapore’s index ended up 0.7 percent at its highest level since June 15, with Keppel Land up 2.2 percent and City Development up 1.5 percent.

Some banks in the region fell after Moody’s said it had a negative outlook on Southeast Asian lenders, with United Overseas Bank down 1.4 percent. But DBS Group Holdings, Southeast Asia’s biggest bank, rose 0.9 percent.

Malaysia eked out a small 0.2 percent gain, with lender Maybank down 1.7 percent, while palm planter Sime Darby rose 0.7 percent.

The Thai index was up 0.9 percent, with PTT Exploration up 1.9 percent and PTT 0.9 percent higher. Siam Commercial Bank and Kasikornbank both fell 0.4 percent.

The Philippine index was up 0.4 percent, with Ayala Land rising 1.2 percent, while Vietnam climbed 1.7 percent, with Bao Viet Holdings, the country’s top insurer, up nearly 5 percent.

Bucking the trend, Indonesia inched down 0.2 percent, pulled down by a 7.2 percent fall in Bank Central Asia and a 1.5 percent loss in top lender Bank Mandiri.

In Japan, consumer price data showed a record drop on the year in May, with falling demand increasingly blamed as the country’s second bout of deflation in less than two years deepens.

New Zealand’s economy shrank for the fifth quarter in the first three months of this year, marking its longest contraction on record.

Debt markets have benefited from economic uncertainty and the yield on the benchmark 10-year Treasury note, which moves opposite to price, touched its lowest level in four weeks on Thursday as a jump in jobless claims aggravated worries.

Treasuries fell slightly in Asia, pushing the yield back up to 3.567 per cent as investors took profits.

But markets are more confident than they were a few months ago and for shares, the US Federal Reserve’s statement on Wednesday reinforced expectations that interest rates will remain at a record low for a while.

In one measure of how investor sentiment has improved, the CBOE Volatility Index, a favourite measure of investor anxiety, on Thursday closed at its lowest level since just before Lehman Brothers filed for bankruptcy protection last September.

Investor confidence was also helped on Thursday by the Fed and its counterparts around the world extending currency swap lines until February 2010 so they have US dollars to lend in their markets.

The dollar index, a gauge of its performance against six other major currencies, fell 0.4 per cent and the US currency softened to 95.94 yen, while the euro rose 0.4 per cent to $1.4040. The dollar has risen about 6 per cent against the yen this year but only 1.2 per cent on the index.