(Repeats to wider audience with no changes to text)
By Tom Miles
HONG KONG, April 23 (Reuters) - Asian shares made dogged
progress on Wednesday, shrugging off the burden of near-$120 a
barrel oil and a record high euro to continue a rally that has
recovered all the ground lost last month.
Equity markets have suffered massive losses as fallout from
the subprime crisis added to fear of a U.S. recession. But with
many shares trading at bargain prices, investors have been
looking for the moment to head back in.
"Fears over the credit crisis have receded after U.S. bank
results. But the clouds have not cleared, with the dollar weak
and oil prices surging," said Harushige Kobayashi, head of
research at Maruwa Securities.
MSCI's index of Asian stocks outside Japan <.MIAPJ0000PUS>
was up 0.7 percent at 488.97 by 0232 GMT, having climbed back
from a low of 418.05 struck on March 18.
The dollar has tumbled in recent months and touched a
record low of $1.60 to the euro on Tuesday, before recoiling to
$159.74 in early Asian trade on Wednesday.
"If the euro does not fall back immediately, it could move
into a range of around $1.6 to $1.63," said a senior trader for
a major Japanese trading house.
The dollar held around 103 yen <JPY=>, having bounced back
from a low in mid-March, showing a strong correlation with
Asian equity markets.
OILING CHINA'S WHEELS
The weak dollar has helped buoy prices for
dollar-denominated commodities such as oil.
Expectations that the European Central Bank would stay
vigilant on inflationary pressures -- possibly meaning an even
stronger euro -- helped push U.S. crude oil prices <CLc1> to a
record high of $119.90 a barrel on Tuesday.
Oil's strong rally in recent weeks has seen prices rise
more than five-fold since 2002, as booming demand from emerging
markets such as China coincide with long-term supply
constraints.
China, the world's No.2 consumer, further boosted the price
of oil after new government data showed that demand rose 8
percent in March from a year earlier, the quickest rate in 19
months as refiners boosted imports ahead of the Olympic Games
in August. []
"We are seeing no evidence of demand destruction even as
prices keep rising," said Jim Ritterbusch, president of
Ritterbusch and Associates in Galena, Illinois.
"OPEC is still not willing to pump more oil on to the
market and, to add to the situation, there is no significant
production increase beyond OPEC," he added.
In early Asian trade, oil pulled back to $118.05, still
high enough to dent fuel-dependent stocks such as airlines.
Korean Air Co <003490.KS>, the world's top cargo carrier, was
down 0.6 percent; Japan Airlines Corp <9205.T> fell 1.2 percent
and Australia's Qantas <QAN.AX> shed 3.1 percent.
The surge in oil prices and continued worries about
consumer spending took 0.82 percent off the Dow Jones
industrial average <> on Tuesday, while the Standard &
Poor's 500 Index <.SPX> slid 0.88 percent.
But Asian stocks held up, with Japan's Nikkei average
<> adding 0.7 percent, lifted by trading houses such as
Mitsubishi Corp <8058.T> and Mitsui & Co <8031.T>, which gained
from strong oil prices.
South Korean shares rose as the weaker won <KRW=> boosted
technology exporters such as LG Electronics <066570.KS>, the
world's No.5 handset maker. Shares in Samsung Securities
<016360.KS> and Samsung Fire and Marine Insurance Co
<000810.KS> rebounded after the heads of both firms stood down
on Tuesday in the wake of Samsung Group Chairman Lee Kun-hee's
resignation.
Gold <XAU=> edged down around $1 to $919.50 an ounce.
