* Equity markets mostly firmer in Asia, MSCI exJapan up
0.4 pct
* China talks tough on fighting inflation
* Fed to meet, seen revising growth outlook
By Ronald Popeski
SINGAPORE, Dec 14 (Reuters) - Asian stocks advanced on
Tuesday, supported by optimism that China would shun
aggressive measures to curb inflation that could inhibit its
strong economic growth or blunt its voracious demand for raw
materials.
The euro hovered near three-week highs against a broadly
weaker dollar, with traders citing solid buying from accounts,
including Asian central banks, though year-end trading was
thin and choppy.
European stocks were seen mostly unchanged, halting a
two-week rally, as traders awaited the U.S. Federal Reserve's
last scheduled meeting of 2010 later in the day.
Analysts expected the Fed to remain in a holding pattern
as officials evaluate the recent launch of a bond-buying
programme and the health of the U.S. economic recovery after a
spate of encouraging data. Fed officials will likely revise
their economic outlook to reflect stronger growth after the
White House and Republicans agreed to extend tax breaks and
provide a payroll tax cut. []
"Sentiment is decidedly more upbeat now than it was a few
weeks ago," said Austock senior client adviser Michael
Heffernan.
"China didn't increase rates, Ireland has settled down,
America has given the tick to the tax bill and there is no
major domestic data out."
The MSCI index of Asian stocks outside of Japan
rose 0.4 percent, bringing its gains so far
this year to around 13 percent, while the Nikkei edged
up 0.2 percent.
South Korean stocks hit a fresh 37-month high,
breaching the psychologically significant 2,000-point level,
fuelled by gains in key technology issues and automakers such
as Hyundai Motors , which rose 1.4 percent.
Shares of resources companies in Asia were also bolstered
by a jump in metals prices after Chinese weekend data showed
industrial production remained buoyant.
Many investors had feared China would raise interest rates
last week to curb mounting inflationary pressures, but the
central bank opted instead to further increase the amount of
extra capital top banks must hold. []
An official newspaper said on Tuesday China would probably
target the same level of new loans next year as in 2010, a
further indication that policy could be slightly looser than
expected.
"The Chinese economy is very big now and a target of 7.5
trillion yuan in new loans will not trigger all-round
inflation," the front-page report in the Chinese Securities
Journal said.
A Reuters poll released on Monday showed economists still
see a rate rise in China in coming months, but expect
policymakers to rely more on lending controls in 2011 as their
weapon of choice in the fight against mounting price
pressures. []
MOODY'S WARNING RATTLES DOLLAR
The dollar remained soft after a warning from Moody's
overnight.
The credit ratings agency said it could move a step closer
to cutting America's triple-A rating if the Obama
administration's deal to extend tax cuts wins Congressional
approval and pushes up already bloated debt levels.
ID:nN13105751]
The dollar index against a basket of other major
currencies slipped marginally to 79.24, having plumbed
a three-week low of 79.101 on Monday. The euro was at $1.3386,
having risen as high as $1.3433 .
Helped by high metals prices, commodity currencies shone.
The Australian dollar almost hit a month high and could come
close to testing parity. It hovered at $0.9959 .
In New York on Monday, the broad S&P 500 index
closed flat and the Dow ended just above break-even
amid signs U.S. stocks may be nearing overbought levels, and
on investor caution about staking out new positions heading
into year-end.
Oil prices <CLc1> recouped early losses to stand little
changed at around $88.55 a barrel ahead of U.S. oil industry
stock data.
(Editing by Kim Coghill)
(Ronald.Popeski@ThomsonReuters.com +65 6870 3815)
