Shares rise as Merkel remarks soothe nerves
2012/08/17TOKYO (Reuters) - Shares firmed on Friday as German Chancellor Angela Merkel voiced support for the European Central Bank's efforts to contain the debt crisis in the euro zone, soothing investor nerves and prompting them to shift money to riskier assets.
European stocks were likely to take their cue from Asia, after nearing their 2012 peaks the previous day, while U.S. stock futures were barely changed ahead of Wall Street's start. Financial spreadbetters called the main indexes in London (.FTSE), Paris (.FCHI) and Frankfurt (.GDAXI) to open as much as 0.4 percent higher. (.EU) (.L) (.N)
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> edged up 0.1 percent and looked set for a weekly loss of about 0.1 percent. Japan's Nikkei stock average (.N225) rose to a three-month high and closed up 0.8 percent. (.T)
Australia's equity market (.AXJO) led the region higher with a 0.7 percent rise, bolstered by good earnings results, and Hong Kong shares (.HSI) also outperformed their peers with a 0.5 percent gain.
"Funds are waiting for new buying opportunities and earnings will give an indication of how things will be for the second half of the year," said Alan Lam, Julius Baer's Greater China equity analyst.
Merkel said ECB President Mario Draghi's declarations last month to do whatever it takes to save the euro and raising the prospect of buying the bonds of stricken Spain and Italy were "completely in line" with the approach taken by European leaders. She also called for Europe's swift fiscal policy integration, saying time was running short.
The remarks by Merkel, which reinforced views that Europe will introduce new stimulus steps, also buoyed copper and gold while oil slipped on easing fears over supplies.
Copper inched up 0.1 percent to $7,457.50 a tonne.
"Merkel's comments gave the markets some hope and those who have been looking for opportunities to buy in did that," said a Shanghai-based trader.
Brent crude slipped 1 percent to $114.19 a barrel and U.S. crude fell 0.5 percent to $95.09 on a possible release of oil reserves by the United States while Israeli comments on Iran reduced fears of a potential conflict in the Middle East that could disrupt exports.
The euro traded at $1.2347, not far from Thursday's high of $1.2373. The dollar steadied at 79.35 yen, a tad below 79.408 yen hit on Thursday, its highest in more than a month.
August typically has been a month when the dollar weakened against the yen, but this year might prove different, traders and analysts said.
FED LESS CLEAR
While few doubt the ECB will take some decisive steps to tackle the three-year debt crisis, the outlook was less clear for the Federal Reserve's policy tactics.
Such uncertainty has weighed on U.S. Treasuries, pushing the benchmark 10-year Treasury yield up to a three-month high of 1.862 percent on Thursday.
"(U.S.) data continue to firm up. Additional easing by the Fed is unlikely, given this macroeconomic backdrop," Barclays Capital said in a research note.
"Market volatility has remained low, despite low liquidity. The lack of information regarding key market risks has been an important reason for this ... Risky assets may continue to receive some near-term support as investors search for anything with some risk premium associated with it," it said.
Thursday's data showing a trend measure of Americans signing up for new jobless benefits fell close to a four-year low last week, building permits rose in July even when housing starts fell, and a weak regional factory gauge together suggested U.S. recovery may pick up later this year but is still vulnerable.
Data released on Thursday suggested that U.S. recovery may pick up later this year but is still vulnerable. A trend measure of Americans signing up for new jobless benefits fell near a four-year low last week, July building permits rose even when housing starts fell and a regional factory gauge was weak.
The fresh data followed a string of recent solid reports on jobs, industrial output and retail sales for July.
Spot gold inched up 0.1 percent to $1,615.66 an ounce after posting its biggest rise in almost two weeks on Thursday on bets for more central bank stimulus. (GOL/)
Asian credit markets firmed slightly, with the spread on the iTraxx Asia ex-Japan investment-grade index tightening by 1 basis point.
(This version of the story has been corrected to add dropped word in the 2nd paragraph)
(Additional reporting by Clement Tan in Hong Kong and Carrie Ho in Shanghai; Editing by Richard Borsuk)
