* Investors shed defensive sectors as equity rally rolls on
* Oil in striking distance of $60
* Institutional investors taking on more risk - State
Street
(Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, May 15 (Reuters) - Asian stocks rose on Friday
as investors bought shares that stood to benefit the most from
an expected global recovery, but still looked set to post their
biggest weekly decline since March on worries equity markets
have risen too far, too fast.
Investors are still looking to buy riskier assets after a
leading indicator of Japan's economy, one of the hardest hit in
Asia, was not as bad as expected.
The data supported a theme in regional data that companies
are replenishing deleted inventories as orders trickle in and
the sharp decline in Asian exports is slowing.
But consumer demand in the United States and Europe remains
weak, and a sustainable global recovery is unlikely until
confidence in those major markets returns.
Oil prices ticked higher, though were having difficulty
hurdling $60 a barrel, especially after the International
Energy Agency said on Thursday global demand for crude will
reflect the sharpest decline this year since 1981.
Japan's Nikkei share average <> rose 1.7 percent, with
a 6 percent gain in Sony Corp stock <6758.T> among the biggest
boosts to the index after the company forecast a
smaller-than-expected annual loss.
"Despite a series of dismal earnings this time around, a
sense of relief has spread in the market that nothing worse
will likely come out at least until April-June earnings
announcements," said Fumiyuki Nakanishi, a manager at SMBC
Friend Securities in Tokyo.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> was up 2 percent on the day. The materials and
technology sectors were the largest gainers, while utilities
rose just 0.4 percent.
The index was down around 2.7 percent for the week and set
to post its biggest weekly decline since early March, as
economic data reminded investors that the road to recovery is
likely to be a long and painful one.
However, it is still up 41 percent since March 9, when the
global equity rally began.
The U.S. dollar was steady against the euro and yen and was
struggling to climb into the black for the week.
The ICE futures U.S. dollar index <.DXY>, which tracks the
currency's performance against a basket of six major
currencies, stands to post its fourth weekly decline, as
investors increasingly shift to higher-yielding currencies.
In the last week, emerging market equities and bonds have
been the biggest beneficiaries, with institutional investors
apparently unperturbed by a rapid rise in valuations.
"Institutional investors are not about to change course or
U-turn, they are still backing the rally," said analysts with
State Street Global Markets in a note that track 15 percent of
the world's tradeable assets.
"Flows do not suggest that investors are nervous that
prices have gotten ahead of themselves. If anything, the
opposite is true," they said.
The growing willingness of investors to take bigger risks
for the prospect of higher returns is dependent to some degree
on a steady diet of positive economic surprises. Negative ones,
like lower than expected U.S. retail sales this week, dent
confidence.
The New Zealand dollar tumbled 0.6 percent against both the
U.S. dollar <NZD=> and the yen <NZDJPY=R> after data showed
retail sales volume falling by the most on record.
U.S. crude for June delivery was trading around $58.70 a
barrel <CLc1>, largely unchanged on the day. Oil dealers were
caught between bullishness based on rising equity markets and
uncertainty about the outlook for fuel demand.
(Additional reporting by Aiko Hayashi in TOKYO)
(Editing by Kim Coghill)
