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GLOBAL MARKETS-Gold hits another record, Asia shares rise

Published 11/16/2009, 01:46 AM
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* Gold hits new record as dollar falls again

* Asian shares rise on growing optimism on global economy

* Asian currencies firm as Obama set to discuss yuan in China

By Susan Fenton

HONG KONG, Nov 16 (Reuters) - Gold hit a fresh record high on Monday as investors hedged against a weak dollar, while Asian shares gained ground after upbeat reports from U.S. retailers underpinned confidence the global economy is recovering.

European stock futures were set to open higher, according to financial bookmakers, while U.S. equity futures were up 0.7 percent.

Gold surged to a record above $1,128 an ounce, pulling up platinum to its highest level since September 2008, as the dollar dipped 0.4 percent against a basket of currencies and on strong demand for gold futures.

The dollar drifted as currency markets focused on U.S. President Barack Obama's visit to China that began on Sunday and what he might say about the dollar and the Chinese yuan which the U.S. and many other Western nations believe to be undervalued.

Gold, which has gained 10 percent in the past 2 and ½ weeks, was also boosted by comments from investment fund BlackRock, a manager and adviser to the U.S. Federal Reserve, that gold would rise further and central banks would be net buyers of gold this year.

"The most recent break-out in the gold price in U.S. dollars has caused most gold prices to start trending higher at the same time," Evy Hambro, who runs two BlackRock commodities funds that are among the world's largest commodities funds, said in Sydney.

He added that investors were now looking for gold to rise in other currencies as well as U.S. dollars.

"When you start to see the price rising in a range of different currencies, it is a clear sign of a very strong market to come," Hambro said.

NIKKEI SHRUGS OFF JAPAN GDP SURGE

Asian shares rose with the MSCI index of Asia Pacific stocks traded outside Japan and the Thomson Reuters index of regional shares both up around 1.5 percent.

Hopes that the global economy is on a recovery track were reinforced by some upbeat U.S. earnings reports on Friday from Walt Disney and retailer Abercrombie & Fitch together with a bullish outlook from retailer JC Penney

"There are flickerings of improvement in the U.S. economy, it has been slower than people expected but as sure as eggs it is going to happen," said Michael Heffernan, senior client adviser at Austock Group in Australia.

However, the MSCI Asia-Pacific index is already up nearly 70 percent this year, which means short-term gains could be more muted, analysts said.

Japan's Nikkei average rose just 0.2 percent despite third-quarter growth data which showed Asia's biggest economy grew at its fastest pace in more than two years. Gains were curbed by fears the recovery could lose momentum in coming quarters due to weak domestic demand.

News of big share issues by Japan's biggest bank Mitsubishi UFJ Financial Group and electronics giant Hitachi Ltd also weighed heavily on sentiment. Shares in Mitsubishi dived 5.5 percent while Hitachi shares slumped 8.5 percent.

Shares in Hong Kong and China outperformed the region, rising nearly 2 percent, as they continued to attract strong fund inflows following bullish Chinese economic data in the past week. Analysts said Obama's visit to China gave a boost to shares that would benefit if Beijing allows its currency to strengthen.

Asian currencies have also firmed in recent days on expectations China's currency could soon start to appreciate again. The Korean won hit a near 14-month high at 1,154.3 to the dollar at one point and Thailand's central bank was spotted intervening to curb the Thai baht as it hit a one-month high.

However, the Chinese Commerce Ministry on Monday said China should maintain a stable exchange rate while a Finance Ministry official made a thinly veiled criticism of the U.S. for undermining the dollar with its policies.

Gold's continued rise boosted shares of resources companies across the region, including Australian mining firm Rio Tinto AX> , which jumped 4.8 percent.

Oil prices also benefited from a weak dollar, with U.S. crude futures up more than 1 percent at $77.32 a barrel. (Additional reporting by Victoria Thieberger in MELBOURNE and James Regan in SYDNEY; Editing by Kim Coghill) (susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters Messaging: susan.fenton.thomsonreuters.com@reuters.net)

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