* Stocks rise on first trading day of the year, dollar
firms
* Japan Airlines stock jumps 31 pct on report of credit
boost
* Emerging Asian currencies rise on growth optimism
* Oil surpasses $80 despite U.S. dollar strength
By Kevin Plumberg
HONG KONG, Jan 4 (Reuters) - Financial markets were upbeat
on the first trading day of 2010 on Monday, with Asian stocks
hitting a 17-month high and the U.S. dollar up against major
currencies on hopes U.S. job figures this week will reflect a
sustained economic recovery.
Major European stock markets were expected to open mixed,
with Britain's FTSE 100 <> seen down 0.4 percent while
Germany's DAX <> was seen up 0.1 percent, according to
financial bookmakers. U.S. stock futures <SPc1> rose 0.4
percent.
Emerging Asian currencies strengthened on expectations for
a broader recovery in exports as key Western markets improve,
but the trend is posing challenges to regional policymakers
struggling to maintain stable currencies.
"Throughout the last months of last year we highlighted the
expectation of Asian currency outperformance and for that to
show up best against G3 excluding the U.S. dollar," said
Patrick Bennett, Asia foreign exchange and rates strategist
with Societe Generale in Hong Kong, in a note.
"That theme is still very much in play and we look for
further outperformance in coming weeks and months," he said.
Investors focused on bullish indicators, such as figures on
Monday showing manufacturing employment in South Korea at the
highest since January 2008, and ignored the few bearish ones,
like a much larger-than-expected fourth-quarter contraction of
Singapore's economy. [][]
The main event of the week will be the U.S. payrolls
numbers on Friday. The median expectation is for a decline of
20,000 jobs in December, though economists at banks like BNP
Paribas, Barclays Capital and Nomura expect to see the first
jobs growth in two years. []
Japan's Nikkei share average <> rose 1 percent to its
highest close since Oct 3, 2008, led by companies in the
technology sector.
Shares of Japan Airlines Corp <9205.T> soared 31 percent
and were the top gainer in the Nikkei after local media
reported a state-owned bank would double its credit line to the
struggling airline. []
The MSCI index of Asia Pacific stocks outside Japan was up
0.3 percent <.MIAPJ0000PUS> by midafternoon at its highest
level since July 2008. Technology stocks again outperformed,
building on solid gains last year, while financials lagged.
The index gained nearly 70 percent in 2009, its best
performance since 1993. Analysts see more gains this year but
at a much slower and possibly more volatile pace as interest
rate hikes loom in many countries. []
The Thomson Reuters regional equity index was up 0.5
percent <.TRXFLDAXPU>.
HOW TO PLAY 2010
Many strategists do not expect 2010 to deliver the
blockbuster stock market returns of 2009, but many are still
forecasting double-digit gains, especially in emerging markets.
Analysts at Bank of America-Merrill Lynch have been saying
emerging markets are in a "structural bull market." The firm is
looking for the MSCI all-country world index <.MIWD00000PUS> to
rise about 17 percent this year and recommends large-cap
emerging market financial and consumer-related stocks and
developed multinationals.
Emerging Asian currencies shot higher on positive growth
prospects, following last week's December manufacturing data
from China and South Korea. The dollar fell 0.7 percent against
Korean won to 1,155 won <KRW=> and was down 0.85 percent
against the Indonesian rupiah to 9,340 rupiah <IDR=>.
Betting on Asian currency strength in 2010 has been a
common theme among strategists. For example, Goldman Sachs
believes currencies in emerging Asia will benefit from strong
growth, higher inflation and supportive external balances.
The bank said the Indonesian rupiah, the Philippine peso
and Malaysian ringgit would likely strengthen the most because
of their respective authorities' more relaxed attitude to
appreciation. The rupiah gained over 17 percent last year
against the U.S. dollar.
Among the biggest risks for investors in 2010, strategists
list trade protectionism as well as monetary or fiscal policy
missteps as policymakers unwind emergency stimulus measures as
economies improve.
A big dollar rally could also roil global markets.
The dollar rose last week to its highest since early
September 2009, but market watchers are unsure if its newfound
strength was a year-end blip or a signal that the greenback may
be embarking on a long-term uptrend.
The dollar strengthened on Monday because of rising U.S.
bond yields, not investor risk aversion.
The euro slipped 0.1 percent to $1.4304, with dealers
continuing to slash bets on the common currency, even after it
fell 4.6 percent in December.
March 10-year U.S. Treasury futures were down 0.3 percent
<TYc1>. In December, the contract had its biggest monthly
decline since July 2003.
U.S. crude for February delivery rose 0.9 percent to $80.10
a barrel <CLc1>, supported by news Russia has halted oil
supplies to Belarussian refineries after failing to agree on
terms for 2010. []
(Editing by Kim Coghill)
