(Adds European open, JGBs, fresh quotes)
By Tom Miles
HONG KONG, April 23 (Reuters) - Asian shares shrugged off
near-$120 a barrel oil and a euro close to a record high on
Wednesday to continue a equities rally that has recovered all
the ground lost last month.
Equity markets have suffered hefty losses in the past six
months 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.
Some analysts warned the time was not yet right.
"In the U.S., you've got volumes slowing down, you've got
costs pressures and rising costs of debt. That has got to be
bad for profits," said Simon Doyle, head of strategy at
Schroder Investment Management in Sydney.
"We've seen the first wave in the downturn in equity
markets which was driven by subprime and the credit crisis. The
next phase is going to be driven by earnings disappointment on
the back of real economic consequences of that crisis."
Bookmakers expected European markets to start the day
broadly flat, with Britain's FTSE <> opening up 2 to down
5 points, Germany's DAX <> up 2 to down 5 points, and
France's CAC <> up 4 to down 1 point.
Europe is braced for a slew of results, including from
drugmaker GlaxoSmithKline <GSK.L> and semiconductor group
Infineon <IFXGn.DE>, and shareholder meetings from UBS
<UBSN.VX> and Royal Bank of Scotland <RBS.L>, two European
banks under fire for taking big hits in the subprime crisis.
MSCI's index of Asian stocks outside Japan <.MIAPJ0000PUS>
was up 1 percent at 490.54 by 0558 GMT, having rallied from a
low of 418.05 struck on March 18.
Japan's Nikkei average index <> forged ahead early in
the day but gave up most of its gains to close up 0.2 percent.
ANZ BOOSTS BANKS
With banks behind most of the bad news in recent months,
the Sydney market was cheered by Australia and New Zealand
Banking Group Ltd <ANZ.AX>, the first major Australian bank to
release results in the current period, which said its
underlying business was on track despite a challenging global
environment.
The bank's shares rose 4.1 percent, leading the benchmark
S&P/ASX 200 <> up 1.6 percent to a two-month closing high.
The index gains came in spite of a 24-year peak of $0.9517
in the Aussie dollar <AUD=>, which could trim exporters'
profits.
The U.S. dollar also kept close to its weakest ever rate
against the euro <EUR=>, which hit $1.60 for the first time on
Tuesday, before stepping back to trade at $1.5967 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.
But the dollar showed more resilience in Japan, where
exports to the United States showed their biggest fall in four
years. []
The dollar held around 103 yen <JPY=>, having bounced back
from a low below 96 yen in mid-March.
The yen-dollar rate has shown a strong correlation this
year with shares in Asian companies, which can expect more
robust profits when U.S. shoppers enjoy increased buying power
from a stronger dollar.
The worsening outlook for Japan helped to lift Japanese
government bonds, which also gained from investors buying into
yields after the bonds' six-day losing streak. June 10-year
futures <2JGBv1> rose 0.06 point to 137.85.
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 of $119.90 a barrel on Tuesday. Prices fell back by
almost $2 but firmed five cents to $118.12 in Asian trade.
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. []
Gold <XAU=> slipped $2 to $918.30 an ounce but tin traded
on the London Metal Exchange <MSN3=LX> hit a record high of
$22,940 a tonne on worries about supplies from top exporter,
Indonesia.
(Additional reporting by Geraldine Chua in SYDNEY, Luke
Pachymuthu in SINGAPORE, Masayuki Kitano and Taiga Uranaka
TOKYO, Editing by Lincoln Feast)
