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RPT-GLOBAL MARKETS-Shares rise, dollar falls as confidence mends

Published 06/25/2009, 11:00 PM
Updated 06/25/2009, 11:08 PM
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* Asian shares rise, although rise in Tokyo mild

* Dollar falls as investors look to add some risk

* Oil extends gains above $70 a barrel (Repeats to additional subscribers)

By Charlotte Cooper

TOKYO, June 26 (Reuters) - Asian share markets rose on Friday, as higher oil and metals prices boosted resource stocks, while the dollar fell as investors, growing slightly more confident, gingerly shifted some funds back into riskier assets.

U.S. crude oil futures pushed on above $70 a barrel on renewed rebel attacks against oil facilities in Nigeria and worries that a glitch at the largest U.S. oil refinery may tighten gasoline stockpiles. [O/R]

The MSCI index of Asian stocks excluding Japan <.MIAPJ0000PUS> climbed 1.5 percent to 322.92, although remains below the eight-month highs seen at the start of June, while Japan's Nikkei <.N225> was up just 0.2 percent.

Australian shares <.AXJO> jumped 1.4 percent, lifted by oil producers after crude prices firmed, and by Qantas Airways Ltd after it cut and deferred orders of Boeing Co Dreamliner aircraft in a cost-saving move.

"The tone of the market is reasonable, people are prepared to buy on the dips ... but it is also hard to see the market roaring ahead," said David Spry, research manager at FW Holst in Melbourne.

In Japan, Nippon Oil Corp <5001.T> jumped over 4 percent after a newspaper reported that it and other Japanese companies were in the final stage of talks with Iraq to win the development contract for Iraq's huge Nassiriya oilfield. [ID:nT306956]

Suzuki Motor <7269.T> climbed 5.5 percent after a source familiar with the matter said Volkswagen was exploring a potential cooperation deal with Suzuki as a way to boost its expertise in the area of ultra-small cars. [ID:nLP51283]

A climb on Wall Street supported Asian share markets.

U.S. stocks rose after encouraging news from retailer Bed Bath & Beyond Inc and after Federal Reserve Chairman Ben Bernanke withstood grilling in Congress on whether he had coerced Chief Executive Kenneth Lewis of Bank of America to go forward with plans to buy a flagging Merrill Lynch. [ID:nN25267831]

The Dow Jones industrial average <.DJI> closed up 2.1 percent at 8,472.40, with similar gains on the Standard & Poor's 500 Index <.SPX> and the Nasdaq Composite Index <.IXIC>.

MIXED FEELINGS

Many share markets have been in retreat in the past two weeks as investors paused to work out if a rally in place since about March has run out of steam, as economies around the world struggle. Data continues to show a mixed picture.

In Japan, consumer price data showed a record drop on the year in May, with falling demand increasingly blamed as the country's second bout of deflation in less than two years deepens. [JPCPI=ECI] [ID:nT58234]

And in New Zealand, the economy shrank for the fifth quarter in a row in the three months ended March, marking its longest contraction on record. [ID:nWEL394407]

But markets are more confident than they were a few months ago and for shares, the U.S. Federal Reserve's statement on Wednesday reinforced expectations that interest rates will remain at a record low for a while.

In one measure of how investor sentiment has improved, the CBOE Volatility Index <.VIX>, a favourite measure of investor anxiety, on Thursday closed at its lowest level since just before Lehman Brothers filed for bankruptcy protection last September.

Investor confidence was also helped on Thursday by the Fed and its counterparts around the world extending currency swap lines until February 2010 so they have U.S. dollars to lend in their markets. [ID:nN25284069]

The dollar index <.DXY>, a gauge of its performance against six other major currencies, fell 0.4 percent and the greenback softened to 95.94 yen , while the euro rose 0.4 percent to $1.4040 .

Gold prices rose, with spot gold above $941 per ounce as firmer oil prices supported bullion's appeal as potential hedge against oil-led inflation.

U.S. crude futures were trading at $70.57 a barrel, after jumping 2.3 percent the previous session. (Editing by Kazunori Takada)

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