(Adds European opening, updates prices)
By Tom Miles
HONG KONG, May 14 (Reuters) - Asian stocks staged a late
surge on Wednesday to take the Tokyo and Sydney markets to
four-month closing highs, despite weakness in the financial
sector and oil prices holding near to record high levels.
European markets took their cue from a firm Asia, with
major indexes rising at the open. Britain's FTSE 100 <>
was up 0.4 percent, Germany's DAX <> gained 0.4 percent
and France's CAC <> pushed close to 1 percent higher in
early dealings.
Asian shares made a cautious start on Wednesday, irked by
inflation warnings from the U.S. Federal Reserve that
underlined the risk that U.S. interest rates will be on hold
for now. U.S. consumer price data is due for release later in
the day.
Although banking shares remained in the doldrums, the
prospect of a firm dollar buoyed exporters such as Japan's
Honda Motor Co <7267.T>, which raced ahead 3.1 percent.
The Nikkei average <> rose 1.2 percent for its highest
close since January, while other Asian stocks <.MIAPJ0000PUS>
were steady.
Despite the firm tone, Charles Prideaux, BlackRock's chief
operating officer, global equities, said he remained cautious.
"We believe this is going to be more of a grinding
environment where companies with robust business models and
good earnings visibility will be able to prosper because of the
pockets of economic growth that remain," he said in a
statement.
"The challenge for all equity investors right now is how to
navigate this. Our watchwords here are looking for earnings
visibility and earnings sustainability."
Sydney's S&P/ASX 200 index <> rose 1 percent to a
four-month closing high as resources firms, led by BHP Billiton
<BHP.AX> <BLT.L>, enjoyed high oil and metals prices.
BHP Billiton gained as much as 6 percent, with an extra
boost from trader talk that a Chinese company was looking to
buy a stake. []
Prices for zinc <MZN3> and tin <MSN3> leapt after Monday's
massive earthquake in China hit supplies.
SUPPLY WORRIES BUOY OIL
Benchmark U.S. crude oil <CLc1>, at $125.58 per barrel,
stayed close to a record peak near $127 struck on Tuesday after
OPEC producer Iran said it was studying a plan to cut output
despite signs record-high prices were hurting consumer nations.
President Mahmoud Ahmadinejad said a proposal to reduce
Iran's crude output was being reviewed by experts, the
semi-official Fars News Agency reported. []
"The upward trend is still alive. The news about Iran is
creating uncertainties and should keep crude oil prices
buoyant," said Shuji Sugata, manager Mitsubishi Corp Futures
and Securities Ltd in Tokyo.
Oil prices remained strong despite a resilient U.S. dollar,
which traded around 104.70 yen <JPY=>, helped by comments from
officials from the U.S. Federal Reserve, which has slashed
rates as the credit crisis deepened over the past six months.
Fed officials signalled a growing wariness of inflationary
energy costs. [].
"There still is growth in the world economy, even if we
slow down," Dallas Fed President Richard Fisher said. "It's
difficult for me to see a supply response that will feed into
that demand to relieve all the price pressures we see on oil."
The various Fed comments, coupled with surprisingly strong
U.S. retail sales in April, supported the dollar but fuelled a
sell-off in U.S. Treasuries.
Japanese government bonds followed suit on Wednesday, with
10-year futures <2JGBv1> falling 1.83 points at one stage to
134.28, their lowest since mid October.
"Conditions in financial markets are still far from
normal," Federal Reserve Chairman Ben Bernanke said in a
speech. "Ultimately, market participants themselves must
address the fundamental sources of financial strains. This
process is likely to take some time."
His comments hurt banks and bonds.
"The market mood had finally been starting to improve in
regard to the financial sector, but Bernanke's comments sort of
dashed cold water on that," said Takashi Ushio, head of the
investment strategy division at Marusan Securities.
Investors are now waiting for the U.S. consumer price index
(CPI) later on Wednesday for further clues on the potential
course of U.S. interest rates. <ECONUS>
"If retail sales have prompted market players to think the
Fed may be done cutting rates, they will be more convinced of
that if the CPI turns out to be solid," said a trader at a
Japanese bank.
(Additional reporting by Tetsushi Kajimoto and Elaine Lies in
Tokyo, Maryelle Demongeot in Singapore; Editing by Neil
Fullick)
