By Tom Miles
HONG KONG, May 2 (Reuters) - Asian stocks jumped on Friday
as faith in the U.S. economy gathered steam after a rally on
Wall Street, a rise in the dollar and another plunge in oil
prices.
The growing optimism lifted Japan's Nikkei average <>
1.8 percent by 0226 GMT, extending a rally that has wiped out
almost all its losses since mid-January and keeping it firmly
above the 14,000 mark.
Data overnight showed U.S. personal spending in March was
higher than expected, while manufacturing activity did not
contract as much as some analysts had feared. Investors are now
focusing on the non-farm payrolls report due out later on
Friday.
"Sentiment about the U.S. economy is brightening a bit and
stocks appear to be rising on long-term hopes about this, even
though there is still some concern about the jobs data due out
later today," said Yumi Nishimura, manager at Daiwa Securities
SMBC.
"Some profit-taking is emerging above 14,000 but there's no
sense of significant selling."
Banks such as Mizuho Financial Group <8411.T> and property
developers such as Sumitomo Realty & Development Co Ltd
<8830.T> rose on growing confidence in the U.S. economy, while
exporters like Honda Motor Co <7267.T> gained on a stronger
dollar.
Shares across the rest of Asia <.MIAPJ0000PUS> gained 1.5
percent.
Although many Japanese market players were away for Japan's
Golden Week holidays, which will close Tokyo's markets on
Monday and Tuesday, investors elsewhere flooded back after a
holiday.
Most Asian markets, with the exception of Tokyo and Sydney,
observed the Labour Day holiday on Thursday, and were catching
up with the U.S. Federal Reserve's latest interest rate cut and
stronger than expected U.S. economic growth in the first
quarter.
In Australia, the benchmark S&P/ASX 200 index <> rose
1.7 percent to a nine-week high.
"There is more confidence in the market and it may be the
case for the next couple of days," said Robert Hook, portfolio
manager at SG Hiscock & Co.
"In the short term, everyone's taking a more positive view
but whether they are taking out their party hats yet, I'm not
sure."
DOLLAR UP, OIL DOWN
Australia's resources-heavy market was dragged back by
sinking prices for commodities and oil, which have retreated as
the dollar has rallied.
The dollar was trading around 104.6 yen <JPY=> and held its
ground against the euro <EUR=>, which fell below $1.55 for the
first time in five weeks on Thursday. The euro was trading at
$1.5471.
The retreat in oil prices, which had threatened to hit a
record of $120 a barrel last week, quickened after supply
concerns eased in Britain and Nigeria. U.S. light crude <CLc1>
stood at $112.07 in Asian trade on Friday.
Oil has fallen as demand from the top consumer, the United
States, wanes on the back of surging fuel costs and wider
economic woes.
Analysts said a strengthening U.S. dollar remains the main
downside risk for oil prices, which could fall to low $100
levels a barrel should the dollar gain more ground.
"We expect that this recent reversal of fortunes for crude
oil prices may continue to hold for a few more weeks at least,
with great volatility, guessing that there may be a mini-rally
for the U.S. dollar in the works," First Energy Capital said in
a research note.
The rebound in the dollar and slump in oil prices added to
the tailwinds behind U.S. stocks on Thursday, with financial
and tech gainers pushing the Dow Jones index <> up 1.5
percent.
U.S. investors' improving mood was reflected in a fall-off
in the CBOE Volatility Index <.VIX>, which slumped 9.2 percent
to 18.88, its lowest this year.
With confidence seeping back, safe-haven assets such as
gold and government bonds lost some of their appeal.
Gold <XAU=> hovered at a four-month low around $850 an
ounce while Japanese Government Bonds pulled back after a 2-day
rally. June futures fell 0.22 point to 136.18 <2JGBv1> in
subdued trade.
(Editing by Kim Coghill)
(Additional reporting by in SYDNEY, in TOKYO, in SINGAPORE,
in SEOUL)
