* Euro rallies after the ECB signals an April rate hike
* U.S. payrolls data may beat estimates
* Treasuries fall, gold slips as safe haven demand tarnished
By Saikat Chatterjee
HONG KONG, March 4 (Reuters) - Asian stocks were poised for
their best weekly gains in three months as market players hunted
for bargains while the euro perked up after the European Central
Bank signalled a rate hike as early as next month.
Friday's gains brought stocks to near levels since the
Libyan crisis erupted, indicating markets have been largely
resilient to oil's 12 percent surge in the past two weeks.
A reasonably strong correlation between Asian equities and
oil shows both track the broad growth story except for periods
when markets have grown nervous of a price shock and the
resulting spillover impact on inflation.
The region is a big importer of oil.
But the pull-back in oil from 2-1/2 year highs
following two days of strong gains that sent a key technical
indicator to its most overbought level in more than five years
for Brent crude alleviated such concerns.
A strong Wall Street close and hopes that U.S. jobs data due
later may show strong gains and reinforce expectations of a
steady improvement in the world's biggest economy boosted stocks
with Tokyo and Seoul leading gains.
But further gains on Wall Street looked difficult with the
S&P 500 Index set to run into strong resistance around
the 1,340-60 zone.
The broader MSCI index of Asia-ex Japan stocks
rose more than a percent, extending its weekly
gains to nearly three percent.
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Story on European Central Bank rate decision:
Brent's Relative Strength Index: http://link.reuters.com/wub48r
Asia equities, oil correlations:http://link.reuters.com/xas38r
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"Substantial gains are expected in morning trade on hopes
for good jobs data in the U.S., but the market may trim gains
towards the close because investors remain cautious until they
actually see the figures," said Shinichiro Matsushita, a market
analyst at Daiwa Securities.
The median estimate is for a gain of 185,000 jobs, according
to economists polled by Reuters, but market sentiment was
leaning toward a number above 200,000, traders said.
Notwithstanding the Libyan crisis, Asian markets have
generally underperformed this year as inflows into emerging
market funds have slowed sharply due to concerns of inflation
and crowded positioning in some of the region's markets.
But the latest oil driven sell-off has cleaned up some of
the technical positioning and enhanced the attractiveness of
certain markets such as Korea, according to Barclays Capital
strategists.
Foreign investors were net buyers for a second
straight day in the stock market, the strongest since January.
EURO RISES
Gains in stocks diminished the safe-haven appeal for gold
and U.S. Treasuries with two-year debt yields rising
by as much as eight basis points to 0.77 percent.
In currency markets, the euro paused after a sharp
rally overnight after the European Central bank signalled an
interest rate hike as early as April.
The single currency jumped to near four-month highs of
$1.3976 and last traded at $1.3959. Against the yen, the euro
hit four-month highs at 115.17 and last stood at
115.01.
"We see scope for rates to go up significantly further this
year, beyond the hike now widely expected in April," said
Kenneth Wattret, analyst at BNP Paribas.
The pullback in oil and hawkish rhetoric from the ECB
tarnished safe-haven demand for gold <XAU-> which snapped a
four-day rally. Silver fell more than a percent.
Asian currencies were generally higher after Beijing set a
record high mid-point for the second day, indicating authorities
were using the yuan to help fight high inflation.
(Additional reporting by Ayai Tomisawa in TOKYO, IFR Markets,
Krishna Kumar and Ian Chua in SYDNEY; Editing by Ron Popeski)
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