* Asian shares gain as China hopes boosts outlook for trade
* Euro steady ahead of ECB, sterling dips ahead of BOE
* Oil prices inch higher, gold dips
* JGBs gain, reversing day-earlier steep falls
By Rafael Nam
HONG KONG, Feb 5 (Reuters) - Asian shares edged up
cautiously for a third straight session on Thursday as hopes
for a recovery in China's economy raised confidence about the
outlook for global trade, sending shipping firms sharply
higher.
Oil prices also inched up, reversing earlier falls, while
gold prices dipped as investors grew more comfortable with
riskier assets.
The euro held steady against the dollar ahead of a European
Central Bank meeting expected to result in no changes in
interest rates, though sterling weakened ahead of an expected
rate cut from the Bank of England, also due later in the day.
Signs of improving sentiment in Asian markets reflect
confidence that a surge in government spending in China and
elsewhere could prevent an excessive downturn in economic
growth. Chinese manufacturing data on Wednesday was also not as
bad as some in the market had expected, helping bolster
sentiment.
"I think it's safe to say China's economy won't fall that
much. There's a bit of light here," said Katsuhiko Kodama,
senior strategist at Toyo Securities in Japan.
The softening of a "Buy American" plan in the $900 billion
U.S. stimulus bill may also prove positive for global commerce,
after U.S. President Barack Obama expressed concern the
original language could trigger a trade war. []
The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> reversed earlier falls to gain 0.7 percent as
of 0515 GMT. However, Japan's Nikkei average <> dipped 0.2
percent after swinging between gains and losses.
Shipping firms such as South Korea's Hyundai Merchant
Marine <011200.KS> were among the day's leading gainers after
the Baltic Dry Index <.BADI> -- which measures changes in the
cost of shipping commodities -- continued to gain, with a
nearly 15 percent rally on Wednesday.
The gains in that index reflect in part signs of recovering
demand for raw materials in China, analysts said.
Optimism in regional markets was, however, tinged with
caution following glum profit forecasts from companies such as
U.S. food maker Kraft <KFT.N>.
U.S. employment is also expected to remain bleak, as
investors focus on the monthly jobs data due out on Friday.
"The fact that China-related shares like shippers and steel
are up on hopes for additional Chinese economic steps shows
that sentiment isn't entirely gloomy, and market direction
could change," said Noritsugu Hirakawa, a strategist at Okasan
Securities.
Hong Kong <> and Shanghai <> posted the strongest
gains among major Asian indexes with gains of 1-2 percent each.
Shares in South Korea <> and Singapore <.FTSTI> posted
modest gains, while markets in Australia <> and Taiwan
<> were flat.
PROACTIVE
China is not the only one taking steps to revive growth,
with governments globally ramping up spending, cutting taxes
and bailing out banks or even industrial sectors.
Central banks meanwhile are cutting rates aggressively in a
bid to revive growth. The Bank of England on Thursday was
expected to lower already record low interest rates by at least
another 50 basis points to 1 percent. []
The European Central Bank, however, is expected to keep its
rates on hold for now at 2 percent after four months of cuts.
[]
The euro was little changed from late U.S. trading on
Wednesday at $1.2820 <EUR=>, after slumping a day earlier when
Fitch became the second credit ratings agency within two months
to downgrade Russia's ratings.
Against the Japanese currency, the euro dipped 0.3 percent
to 114.48 yen <EURJPY=R>, while the dollar eased 0.2 percent to
89.28 yen <JPY=>.
Sterling dipped 0.4 percent to $1.4413 <GBP=D4>.
Oil prices <.CLc1> rose 15 cents to $40.46 a barrel, after
starting Asian trade with falls that had been sparked by data
on Wednesday showing a rise in U.S. crude inventories.
Gold <XAU=> fell $1.3 to $903.55 as investors switched
safe-haven assets for riskier ones such as stocks which may
offer higher returns. Still, analysts at Goldman Sachs said
gold's safe-haven appeal remained intact and should support
prices in coming weeks.
Prices of bullion could reach $1,000 an ounce in the next
three months, Goldman Sachs said in a report, boosting its
forecast from its prior call at $700 an ounce. []
Elsewhere, benchmark 10-year yields for Japanese government
bonds dropped 2 basis points to 1.325 percent <JP10YTN=JBTC>,
after hitting a high of 1.350 percent on Wednesday, the highest
since mid-December.
March futures rose 0.12 point to 138.47 <2JGBv1>,
rebounding from a 2 1/2-month low of 138.28 touched the
previous day.
