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Asian markets gain on hopes for ECB action

September 6, 2012

HONG KONG: Asian markets and the euro rose today ahead of a European Central Bank meeting that many expect will see the restart of a sovereign bond-buying programme aimed at easing the eurozone debt crisis.

Tokyo edged up 0.01%, or 0.75 points, to 8,680.57 while Seoul advanced 0.38%, or 7.21 points, to close at 1,881.24.

Sydney rose 0.80%, or 34.1 points, to finish at 4,312.9 after Qantas Airways jumped 6.67% at US$1.20 on an announcement it has tied up with Emirates Airlines as part of a global alliance to turn around its international arm.

In the afternoon Hong Kong was flat while Shanghai was up 0.13%.

The gains were also helped by bargain-hunting after two days of losses caused by another batch of weak manufacturing data that fuelled concerns over the global economy.

Investors have become increasingly confident that the ECB will announce plans to buy up the debt of under-pressure countries that have seen their borrowing costs soar to dangerous levels.

Bank chief Mario Draghi raised hopes in July by saying it would do whatever was needed to save the euro, and expectations were raised further this week when European lawmakers said he had hinted at buying short-term debt on the secondary market.

Such a move in the past was justified to help stabilise and protect the 17-nation eurozone, he said, according to the politicians.

And on Wednesday media reports said the ECB planned to re-enter sovereign debt markets with unlimited bond purchases.

The expectations sent the euro higher in New York late yesterday after easing slightly earlier in the day in Asia.

In Tokyo today, the single currency rose further, fetching US$1.2610 and 98.91 yen against US$1.2600 and 98.78 yen in New York.

The dollar was at 78.43 yen, compared with 78.38 yen.

However, Hiroichi Nishi, general manager of equities at SMBC Nikko Securities, told Dow Jones Newswires that traders would remain edgy until after the ECB meeting later today.

“It will be more of the same as in recent sessions – small net market movements, reduced volatility, with some bargain-buying in oversold issues, as well as some added buying in euro-exposed issues,” he said.

“The ECB meeting is the main focus, however, and trading will be thin until more is known about the implications” of the central bank’s policy stance.

On Wall Street, the three main indexes closed mixed. The Dow edged up 0.09 percent, the S&P 500 eased 0.11 percent and the tech-rich Nasdaq fell 0.19 percent.

Once the ECB meeting is out of the way dealers will be looking to the United States, where non-farm jobs data will be released tomorrow, which will give a clearer indication as to the state of the world’s number one economy.

Oil prices advanced. New York’s main contract, light sweet crude for October delivery, rose 50 US cents to US$95.86 a barrel and Brent North Sea crude for October was 47 US cents higher at US$113.56.

Gold was at US$1,701.74 at 0625 GMT compared with US$1,691.51 yesterday.

In other markets:

  • Wellington rose 23.89 points, or 0.65% at 3,693.54. Telecom Corp was up 0.41% to NZ$2.465 and Air New Zealand increased 3.24 percent to NZ$1.115.
  • Taipei fell 40.72 points, or 0.55% at 7,326.72. Taiwan Semiconductor Manufacturing Co shed 1.1% at Tw$81.1 while Hon Hai Precision was 0.45% lower at Tw$88.4



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