GLOBAL MARKETS-Shares gain, US data leaves scope for Fed easing


  • Business
  • Monday, 30 Apr 2012

TOKYO (Reuters): Asian shares inched higher on Monday as weaker-than-expected U.S. growth data left open the possibility for more monetary stimulus from the Federal Reserve, but trading will likely be subdued with Japanese and Chinese markets closed.

Global stocks ended higher on Friday on strong earnings reports, while the dollar dipped as data showed growth in the U.S. economy cooled in the first quarter to a 2.2 percent annual growth rate, below a 2.5 percent forecast, feeding views that the Fed could ease policy further to boost growth.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4 percent. Early on Monday, South Korean data showed industrial output fell a seasonally adjusted 3.1 percent in March from February, below market expectations and clouding prospects for a turnaround in Asia's fourth-largest economy.

This followed weaker-than-expected first-quarter results on Friday from China's Big Four banks, highlighting a sector that faces growing pressure from a slowing economy and higher funding costs.

The dollar stayed under pressure on Monday, keeping the yen near its highest since February of 80.21 yen reached on Friday and the euro near its 3-week high around $1.3270, hit also on Friday.

Currency speculators cut their long U.S. dollar positions for a second consecutive week in the latest week, while also trimming their short euro and yen positions, according to data from the Commodity Futures Trading Commission released on Friday.

The Bank of Japan took further easing steps on Friday which had little lasting effect in weakening the currency.

Analysts say concerns over Europe's debt woes could support demand for the yen, but Japan's own structural problems such as high public debts and deteriorating trade terms would weigh on the currency to weaken the momentum of the yen's climb towards its record high near 75.

Yields on sovereign debts of euro zone countries remained elevated on Friday, although below a critical level, with Spain's 10-year bond yield briefly touching above 6 percent after a Standard & Poor's downgrade of its debt late on Thursday.

Friday's data underscored Spain's economic plight, with nearly a quarter of its work force unemployed.

Brent June crude settled down 9 cents at $119.83 a barrel on Friday. U.S. June crude was down 0.1 percent at $104.80 a barrel early on Monday, after settling up 38 cents.

Reflecting investor cautions towards risks, EPFR Global said U.S. bond funds drew in $4.63 billion in the week ended April 25 for the 25th consecutive week of inflows and the longest run of gains since mid-2010.

Globally, equity funds fared poorly in the week with net redemptions of $7.38 billion, EPFR said. Asian credit markets were subdued, with the spread on the iTraxx Asia ex-Japan investment-grade index barely moved from Friday.

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