Feb 25, 2013

Hong Kong - Asian markets rise, yen sinks on BoJ chief reports

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HONG KONG: Asian markets rose on Monday, with Tokyo surging after the yen hit a near three-year low against the dollar, while concerns the US Federal Reserve could soon end its loose policy were eased.

Investors cheered reports that the choice of Japan's prime minister to take over as the new head of the central bank was in favour of aggressive easing, while the pound sat around multi-year lows after Britain lost its AAA credit rating.

Also, China's manufacturing growth hit a four-month low in February but remained positive, British banking giant HSBC said.

Tokyo surged 1.95 per cent by the break, Hong Kong added 0.10 per cent, Sydney was 0.72 per cent higher, Shanghai gained 0.40 per cent and Seoul was flat.

Japanese media said Prime Minister Shinzo Abe is set to nominate Asian Development Bank president Haruhiko Kuroda to be the next governor of the Bank of Japan.

Abe has decided to pick Kuroda "as he backs Prime Minister Shinzo Abe's bold monetary easing policies while maintaining good links with the international financial industry," the Nikkei business daily said.

A former vice finance minister for international affairs, Kuroda is known as an advocate of aggressive monetary easing to overcome Japan's deflation, a stance in line with Abe's economic policy.

The cabinet plans to submit his nomination for parliamentary approval this week, the Nikkei and other newspapers said.

"There was a little euphoria because we have some clarity over the Bank of Japan and that caused the yen to sharply weaken after the opening," Tim Waterer, senior trader at CMC Markets in Sydney, told Dow Jones Newswires.

The dollar surged to 94.77 yen in early trade, its highest since May 2010, before easing to 94.13 yen, but well up from 93.37 yen in New York late Friday

The euro changed hands at 124.19 yen, compared with 123.18 yen on Friday, while it also sat at $1.3186 from $1.3189.

Regional sentiment was also boosted by easing concerns over the Fed's bond-buying scheme.

Speculation it would end its quantitative easing programme in 2013 had driven stock markets lower last week but on Friday US investors began to conclude that the market had "misinterpreted" the bank's meeting minutes that discussed such a move, said Peter Cardillo of Rockwell Global Capital.

Cardillo expected Fed chief Ben Bernanke to reaffirm the scheme in congressional testimony this week, while St. Louis Fed President James Bullard told CNBC that the policy will remain in effect for "a long time".

On Wall Street the Dow rose 0.86 per cent, the S&P 500 gained 0.88 per cent and the Nasdaq rose 0.97 per cent.

The pound remained under pressure on currency markets after Moody's on Friday said it had cut Britain's rating for the first time in history, citing weak growth and rising debt.

The unit sank at one point Monday to $1.5072, its lowest level since July 2010, before recovering slightly to sit at $1.5117. The pound was at 1.5250 before the Moody's announcement.

In China, HSBC said its preliminary purchasing managers' index (PMI) stood at 50.4 for the month, down from a final 52.3 in January, although it marked the fourth consecutive month of growth after 12 months of shrinkage.

A reading above 50 indicates expansion.

"The Chinese economy is still on track for a gradual recovery," Qu Hongbin, a Hong Kong-based economist with HSBC said in a statement, downplaying the fall in the index.

On oil markets New York's main contract, light sweet crude for delivery in April, dropped 11 cents to $93.02 a barrel and Brent North Sea crude for delivery in April shed 30 cents to $113.80.

Gold was at $1,583.40 at 0255 GMT, compared with $1,579.80 late Friday.

- AFP/ck

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