By Rafael Nam
HONG KONG, May 15 (Reuters) - Asian shares and the dollar
rose on Thursday after investors welcomed benign U.S. inflation
data as a sign the Federal Reserve will have more wiggle room
to deal with the downturn in the world's biggest economy.
Improving earnings prospects also comforted markets.
Japan's Sony Corp <6758.T> surged 9 percent a day after it
issued a surprisingly upbeat operating profit forecast despite
the challenges posed by a slowing U.S. economy and a stronger
yen.
Oil prices retreated from record levels, easing some of the
inflation fears that have hit Asian stocks this month, and
encouraging investors to sell their safe bond holdings to bet
on riskier assets.
"There is certainly positive momentum in the market," said
Lucinda Chan, division director at Macquarie Equities in
Sydney.
"I think that despite all the uncertainty, these are often
very good times for investments and people are beginning to
sense that mood now," she said.
A rally in Asian stocks last month fizzled when May started
with it a surge in oil prices to record highs that reinforced
fears the world economy could face a crippling combination of
high inflation and meagre growth.
The MSCI index for Asian stocks outside Japan
<.MIAPJ0000PUS> rose 0.5 percent as of 0215 GMT, up some 18
percent since the mid-March lows but down about 7 percent for
the year.
The gains matched Walls Street's advance <> after data
on Wednesday showed U.S. consumer prices rose a 0.2 percent in
April, less than expected. []
That is expected to give the inflation-wary Federal Reserve
more latitude to keep U.S. interest rates low at 2 percent as
it seeks to support the national economy and calm financial
markets.
RESILIENT EARNINGS
Japan's Nikkei share average <> rose 1 percent,
extending its gains for a fourth day, reflecting growing
optimism about earnings prospects and gains of exporters such
as Honda Motor Co Ltd <7267.T>, which benefit from a soften
yen.
Sony posted on Wednesday a surprise quarterly loss due to
the falling value of some securities it holds, but its
operating profit forecast for this financial year was rosier
than expected as it aims to boost TV sales and wipe away losses
on the PlayStation 3. []
Improved earnings outlooks also lifted other regional
stocks, with South Korea's LG Electronics Inc <066570.KS> up 5
percent afer hitting a record high earlier in the day.
South Korea's KOSPI <> index jumped 1.5 percent, with
Samsung Electronics Co Ltd <005930.KS> hitting a new all-time
high a day after announcing a top management reshuffle.
Sock markets in in Taiwan <>, Australia <>,
Singapore <.FTSTI>, Hong Kong <> and Shanghai <>
gained less than 1 percent.
DOLLAR GAINS
The dollar edged up against other Asian currencies,
crawling back towards a two-month high, as the tame U.S. price
data helped ease fears that high inflation could jeopardise
efforts to kick-start the sluggish economy.
The dollar was up 0.2 percent to 105.27 yen <JPY=>, near
the 105.70 level it hit earlier this month, which had marked
its highest since late February.
Some of the inflation concerns also eased after oil prices
retreated from the record $126.98 a barrel hit on Tuesday after
assurances by Iran it had no plans to cut exports and a U.S.
inventory report that showed a rise in supply of distillates.
U.S. crude futures <CLc1> were down 46 cents at $123.76 in
Asian trade.
Gold <XAU=> also tracked oil prices lower, trading at
$863.20/864.20 compared to $865.05/866.25 in late New York
trade on Wednesday.
As is usual in cases of rising risk appetite, regional
bonds fell, with Japanese government bond futures extending
sharp losses suffered the previous day.
June 10-year JGB futures <2JGBv1> fell 0.21 point to
134.76.
