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GLOBAL MARKETS-Asia stocks at 14-mth high, bull run persists

Published 10/19/2009, 11:21 PM
Updated 10/19/2009, 11:27 PM
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* Commodities, Apple results boost shares across the board

* Oil tops $80, gold nears record high on weak US dollar

* FX carry trades appear back in vogue

By Kevin Plumberg

HONG KONG, Oct 20 (Reuters) - Asian stocks rose to a 14-month high on Tuesday after strong sales numbers from Apple Inc suggested U.S. consumers are spending more and as the weak U.S. dollar kept pushing commodity prices higher.

Oil topped $80 a barrel and gold neared a record high, with the dollar locked in a steep downtrend as investors searched for higher returns elsewhere.

Portfolio flows into emerging market assets have been torrential, leading Brazil to slap a 2 percent tax on foreign investment in domestic stocks and bonds to try to cool its real currency, which has surged 36 percent this year.

Japan's Nikkei share average rose 1.1 percent, supported largely by a mixture of stocks in the technology sector.

"These (U.S.) results are inevitably providing a bit of a boost, particularly for parts suppliers and chip makers, while a whole range of China-linked shares are also doing well," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo.

Shares of Komatsu Ltd, the world's second-biggest maker of construction equipment, rose 2 percent after a report the company had made 10 billion yen in operating profit for the July-September quarter on demand from China and other developing markets.

The benchmark MSCI index of Asia-Pacific shares outside Japan rose more than 1 percent.

U.S. stock futures rose 0.4 percent after profits at Apple Inc, released after the closing bell, exceeded market forecasts on record quarterly sales of iPhones and Macs.

Shares of Apple jumped 7.5 percent in after-hours trading to a record high. During the regular session, U.S. stocks gained about 1 percent to fresh 12-month highs as investors cheered a wave of solid quarterly earnings.

Investors have been anxiously awaiting earnings season for signs that consumer demand is improving, which would reinforce the chances of a sustainable global economic recovery and give new legs to a seven-month equity rally which has been showing signs of flagging.

Company earnings in the last quarter were largely bolstered by cost cutting as opposed to a true pick-up in demand for their products.

DOLLAR WEAKNESS

The dollar fell to its lowest in 14 months against a basket of currencies on persisting views that policy makers in the United States will stick to a low interest rate policy for some time while they await signs that an economic recovery is on solid footing.

The dollar index, a gauge of its performance against six major currencies, fell as far as 75.150, its lowest since August last year.

The euro was up 0.1 percent at $1.4986 but was meeting selling pressure by dealers protecting positions at the round figure of $1.50.

By contrast, minutes from a Reserve Bank of Australia policy meeting earlier this month pointed to more interest rate increases ahead and said the stronger Australian dollar was a sign of improving sentiment that would help contain inflation.

"There are no warning signs for AUD bulls," said Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong, in a note.

The Australian dollar briefly rose above US$0.93 to the highest in 14 months before easing to $0.9293 even on the day.

The benchmark Australian stocks index was up 1.6 percent and outperformed the region, helped by mining stocks and hedge funds scooping up shares of banks that can take advantage of the strong currency.

"This currency carry trade in banks has taken the major banking sector to a premium to the broader market. I think that's ambitious," Southern Cross' head of institutional dealing, Charlie Aitken, said in a note.

U.S. crude for November delivery rose more than half a percent to a one-year high of $80.05 a barrel its strongest since Oct 14, underpinned by the ailing dollar, global recovery hopes and bullishness in equity markets.

Gold also firmed on dollar weakness, climbing 0.3 percent to $1,066.60 an ounce in the spot market, just shy of a record $1,070.40 hit last week. (Editing by Kim Coghill)

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