* Asian shares heading to biggest weekly gain in a year
* Euro holds gains near 2-month peak vs dollar
* Upbeat ECB comments, stress test details help euro
By Umesh Desai
HONG KONG, July 9 (Reuters) - Asian stocks climbed for a
second day and the euro held near two-month highs on Friday,
boosted by positive U.S. data and the European Central Bank's
cautiously upbeat view of the euro zone's recovery.
The Japanese yen <JPY=> was under pressure as investors cut
long positions and shifted towards high-yielding currencies
such as the Australian dollar <AUD=D4> and the New Zealand
dollar <NZD=D4>.
European shares are expected to open higher with futures on
STOXX Europe 50 <STXEc1>, Germany's DAX <FDXc1> and France's
CAC-40 <FCEc1> up 0.6 to 0.9 percent. U.S. data showed on
Thursday first-time jobless claims dropped to their lowest
level in two months and some large retailers reported solid
sales.
In Asia, the MSCI index of Asia Pacific stocks outside
Japan <.MIAPJ0000PUS> rose 1.3 percent, on track for its
biggest weekly gain in a year, with the consumer durables
<.MIAPJCD00PUS> and energy sectors <.MIAPJEN00PUS>
outperforming. The index is still down more than 6 percent this
year.
Tokyo's Nikkei share average <> rose 0.5 percent,
holding above a key support level after pulling away from a
seven-month low.
"The market has factored in worries about Europe and the
possibility of a double dip in the U.S. economy, and it's now
most likely found a floor," said Kazuhiro Takahashi, general
manager at Daiwa Securities Capital Markets.
Interest rate increases by the South Korean and Malaysian
central banks have underlined the growing confidence about
Asia's recovery after the International Monetary Fund said a
double-dip world recession was unlikely. []
[] []
Fears that recovery from the world's worst downturn in
decades could stall had triggered outflows of more than $11
billion from equity funds worldwide in the first week of July
and induced the biggest inflows in 18 months for safe haven
money market funds, fund tracker EPFR Global said.
[]
Bank of Korea's quarter point rate rise on Friday, its
first increase since the outbreak of the financial crisis
follows Thursday's hike by Malaysia's central bank, cementing
market expectations of solid growth ahead.
"It appears that policymakers across Asia are reasonably
confident about the economic outlook despite concerns about the
potential impact of euro area weakness and a near-term dip in
growth from the fast pace set earlier this year," said Brian
Jackson, strategist at Royal Bank of Canada.
But there are several hurdles to the market sustaining its
gains with many analysts worried about higher financing costs,
lower earnings and tighter liquidity.
"At the end of the day you are looking at a market which is
at fair value, faced with tight liquiduity and rising cost of
capital and earnings downgrades," said Emil Wolter, head of
regional strategy at Royal Bank of Scotland.
"It seems more likely we will become cheap than expensive
from here."
HSBC analysts said in a research note that Asian stocks
outside Japan were trading at forward price-earnings multiples
above those in Russia and Brazil
Around the region, Taiwan's main TAIEX share index <>
recorded its biggest weekly gain in 10 months while the Korea
Composite Stock Price Index <> finished just 2 percent shy
of its 2010 peak.
Taiwan's stocks have been outperforming the region in
recent sessions on hopes of sustained growth in earnings after
China and Taiwan signed a landmark trade agreement in late
June.
China's battered stock markets, plagued by liquidity
problems due to a flood of issuances, pulled further from
15-month lows struck last week.
The Shanghai Composite index <> is on course for its
biggest weekly gain in a year as the market heaves a sigh of
relief the Agricultural Bank of China mammoth offering is out
of the way, with the listing due next week.
The market focus has now switched to upcoming data with
hopes China's GDP report next week could allay fears of a sharp
slowdown. [][]
Among the region's top performers, Hong Kong's consumer
goods exporter Li & Fung <0494.HK> rose 6.4 percent after the
company said it signed three acquisition deals expected to
bring in more than $1 billion in revenue in 2011.
Australian energy firm Santos Ltd <STO.AX> jumped more than
7 percent after a newspaper reported it was close to inking a
deal with Royal Dutch Shell <RDSa.L> to sell an equity stake in
its Gladstone LNG project.
The euro was flat at $1.2694 <EUR=>, after it broke past
resistance at $1.2673 on Thursday following ECB President
Jean-Claude Trichet's comments that he expected the euro area
economy to grow "at a moderate and still uneven pace in an
environment of high uncertainty."
The euro also got a lift from details about Europe's bank
stress tests which heartened investors who saw criteria for the
checks were no worse than markets expected.[]
The Australian dollar <AUD=> steadied after hitting a
2-week high on Thursday on solid Australian jobs data, which
revived speculation about near-term rate increases. The New
Zealand dollar <NZD=> also held near its highest level since
June 28.
U.S. crude for August <CLc1> rose 29 cents to $75.73 a
barrel on Friday, after touching an intraday peak of $76 on
Thursday, the highest this month. ICE Brent <LCOc1> gained 38
cents to $75.09.
(Additional reporting by Aiko Hayashi in TOKYO and Kim
Yeon-hee in SEOUL; Editing by Kazunori Takada)
