By Tom Miles
HONG KONG, March 14 (Reuters) - Nervy stock markets firmed
on Friday after credit rating agency Standard & Poor's said an
end to subprime related write-downs was in sight, triggering a
rebound in financial shares.
After a day when share prices dropped sharply, the dollar
sank below 100 yen, gold futures <GCJ8> topped $1,000 an ounce
and oil hit a record $111 a barrel, the bears backed off.
Early on Friday, the dollar came out of its skid and
climbed back towards 101 yen <JPY=>, U.S. crude oil <CLc1>
slipped 0.5 percent to $109.77 and spot gold buyers regrouped
at $994 <XAU=>.
"(Foreign exchange) market players have achieved what they
set out to achieve when they broke technically important
targets at 101 yen and 100 yen and have now bought back a
little," said Kengo Suzuki, a currency strategist at Shinko
Securities.
The euro <EUR=>, which has hit repeated record highs
against the dollar, inched back below $1.56.
S&P, one of the ratings agencies under fire for failing to
see the credit crisis coming, called a halt to the
dollar-selling on Thursday by saying subprime write-downs could
reach $285 billion, but noted that the end of the write-downs
"was now in sight" for large financial institutions.
[]
A further boost to market sentiment came from Democratic
Rep. Barney Frank of Massachusetts, who unveiled a bill aimed
at getting the U.S. government involved in buying distressed
mortgages [].
The Dow Jones industrial average <> closed up 0.29
percent on Thursday.
Japan's Nikkei average <> was up 1.2 percent by 0106
GMT on Friday, while MSCI's index of other Asian stock markets
<.MIAPJ0000PUS> added 0.9 percent.
Asian investors worry the U.S. economic slowdown means
weaker demand for Asian exports and a weak dollar denting U.S.
buying power. With stocks far cheaper than six months ago, any
sign of an end to the downturn makes many shares look like
bargains.
Australia's S&P/ASX 200 index <> rose 1.4 percent,
spurred by miners such as BHP Billiton <BHP.AX>, up 2.9
percent, and iron ore prospector Midwest Corp Ltd <MIS.AX>,
which jumped 31 percent after China's Sinosteel Corp launched a
A$1.2 billion ($1.1 billion) hostile takeover bid.
[]
The renewed hopes for the U.S. economy brought a rapid
retreat to U.S. Treasury debt prices <US30YT=RR>. But after the
volatile start to the year, not everyone was convinced.
"If the 'End is in Sight' headline sponsored by S&P's view
on subprime losses is the excuse for equities' strength and
Treasuries' weakness, then we have surely entered the anteroom
of Dante's Inferno," said BNP Paribas credit analyst Brett
Williams in an e-mailed note to clients.
Shinko's Suzuki said the rating agency's opinion had eased
some worries about more losses at financial institutions from
credit market turmoil, but investors will remain cautious until
the market sees quarterly earnings reports from financial
firms.
Major U.S. investment banks such as Goldman Sachs <GS.N>,
Lehman Brothers <LEH.N> and Bear Stearns <BSC.N> are scheduled
to report first-quarter earnings next week.
Gold market bulls saw the pause in buying as a mere lull
before a renewed assault on the $1,000 milestone.
"Providing oil prices maintain a dizzy height and the U.S.
continues to suffer, it looks extremely likely that gold will
test the $1,000 level and likely break through it," said Darren
Heathcote of Investec Australia in Sydney.
(Editing by Ian Geoghegan)
