TOKYO: Asian stocks rose on Thursday amid fresh signs of resilience in the U.S. economy, while the euro wallowed near two-year lows before a much-anticipated European Central Bank meeting that could open the door to more stimulus.
Tokyo's Nikkei climbed 0.7 percent, touching a new seven-year high, with sentiment buoyed by media projections suggesting a strong win for Japanese premier Shinzo Abe's coalition at the Dec. 14 election. A victory for Abe could lead to a new mandate for his "Abenomics" policies to revive the economy.
"There's activity in anticipation of extremely promising conditions being born," said Hiroyuki Nakai, chief strategist at Tokai Tokyu Research Center Co in Tokyo.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.4 percent, while Australian shares <.AXJO> were up 0.5 percent.
The improved mood was helped by the Dow <.DJI> and S&P <.SPX> rising to record highs overnight after private payrolls and services sector data underscored the U.S. economy's resilience.
That contrasted with the gloom in the euro zone, with a survey showing business activity grew less than expected in November and raised the specter of another economic contraction.
The euro struggled as a result. It fetched $1.2311
While a full-blown quantitative easing program after Thursday's policy review is seen as unlikely, some believe the ECB may lay the groundwork for a such move early next year.
"The prospect of a sovereign bond buying program is looking ever more likely. It probably won't begin tonight (however, we see further corporate bond buying tonight)," Evan Lucas, market strategist at IG in Melbourne, wrote in a note to clients.
"The prospect will only increase sentiment towards European equities."
Speculation that the ECB will pave the way on Thursday for sovereign debt purchases has pushed down euro zone debt yields across the board. The Italian 10-year yield
The dollar rose to a new seven-year high of 119.910 yen
Crude oil markets remained choppy after last Thursday's decision by OPEC not to cut supply sparked volatility and a sharp price fall.
U.S. crude futures
Supported by the rise in U.S. futures, Brent crude
Gold's advance halted as the metal's appeal as a hedge against inflation was tempered by the dollar's strength. Spot gold
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