* Oil jumps over $2 as Western forces strike Libya
* Some progress seen at crippled Japanese nuclear reactors
* Yen stabilises after Friday's surge, more intervention
likely
* Further China c.bank tightening boosts Chinese swaps
By Saikat Chatterjee
HONG KONG, March 21 (Reuters) - Asian shares advanced on
Monday as market players scooped up beaten-down stocks after
heavy losses last week, while oil prices jumped more
than $2 as Western forces struck targets in Libya.
Regional stocks had just been picking up after a sell-off in
recent weeks because of a combination of inflation, higher oil
prices and frothy valuations, when the March 11 earthquake and
tsunami in Japan dealt them another blow.
But the latest plunge has brought equity valuations within
the region to average levels and markets particularly in North
Asia are attractive, said Markus Rosgen, head of Asia ex-Japan
strategy at Citigroup.
"From a technical perspective, Asia-ex Japan is very
oversold. Much of the bad news is in the price of Asian equities
and monetary policy is not hugely restrictive," said Rosgen, who
predicts the MSCI ex Japan at 675 points by the end of the year,
a gain of nearly 50 percent from current levels.
Investors may also have been reassured by reports of
progress in repairs at a crippled Japanese nuclear power plant,
and by comments by billionaire investor Warren Buffett that the
recent steep drop in Japanese stocks presented a "buying
opportunity".
The Nikkei plunged 10 percent last week as the
nuclear crisis worsened, pulling shares in the rest of Asia down
nearly 3 percent and weighing on markets in the United States
and Europe, including riskier assets such as oil.
On Monday, the MSCI index of Asian shares outside of Japan
was up nearly 1 percent though investors kept a
wary eye on the battle by Japanese authorities to contain deadly
radiation from crippled nuclear plants and a rising death toll
following the earthquake and tsunami earlier this month.
For the quarter so far, Asian-ex Japan is down nearly 5
percent, underperforming its counterparts in Europe and the
United States.
Japanese markets were closed on Monday for a holiday.
OIL UP
Brent oil futures jumped more than 2 percent at one
point in early trade, topping $116 per barrel, after Western
warplanes and missiles hit Libya at the weekend in a bid to
force leader Muammar Gaddafi to cease fire on rebels and end
attacks on civilians.
Unrest in Syria and Yemen over the weekend also kept traders
on edge.
With a good chunk of Japan's nuclear power capacity likely
knocked out for good, its reliance on fossil fuels such as oil
and natural gas will increase, preventing oil prices from
retreating sharply from current even if the Libyan conflict is
resolved swiftly. So far this quarter, oil is up by more than a
fifth.
Higher fuel prices will revive investors' concerns about
inflation and the prospect for further interest rate increases,
especially in emerging economies.
"I can see uncertainty and fear driving the price of oil
higher in the short term," said Matthew Lewis, an analyst at CMC
Markets in Sydney.
The slight undertone of caution pushed safe haven plays like
gold higher although it stayed well below its record high
hit earlier this month.
In currency markets, the yen stabilised after surging
by nearly 4 percent versus the dollar on Friday, riding on the
back of the first G7 joint intervention in over a decade.
Some indications that further intervention may be needed to
hold up the Japanese currency were evident with the dollar last
trading at 80.85 yen, retreating from a high of 82.00 on Friday.
In China, interest rate swaps rose while stocks and the yuan
advanced after the central bank unexpectedly raised banks'
reserve requirement ratios for the third time this year after
markets had closed on Friday.
* For Reuters Global Investing Blog, click on
http://blogs.reuters.com/globalinvesting
* For the MacroScope Blog, click on
http://blogs.reuters.com/macroscope
* For Hedge Fund Blog, click on
http://blogs.reuters.com/hedgehub
(Additional reporting by Ian Chua in SYDNEY and Alejandro
Barbajosa in SINGAPORE; Editing by Ramya Venugopal)
