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GLOBAL MARKETS-Asia shares rise toward 2-mth peak; techs up

Published 03/23/2010, 03:52 AM
Updated 03/23/2010, 03:56 AM
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* Asia shares gain 0.7 pct, boosted by tech, resource shares

* Hopes for further econ recovery seen supporting equities

* Nikkei dips on profit-taking, yen's resilience

* Euro drifts, still stymied by EU squabbling over Greece aid

By Masayuki Kitano

TOKYO, March 23 (Reuters) - Asian shares inched back towards recent two-month highs on Tuesday as recovering commodity prices boosted shares of resource firms and as tech stocks drew support from gains in their U.S. peers.

The euro held its ground after rebounding from a three-week low against the dollar overnight, but it remained under pressure as major European powers argued over whether to extend financial assistance to debt-laden Greece.

European stocks were expected to open higher, breaking a three-session losing run, as the market tracked gains on Wall Street, where the passage of a fiercely debated healthcare reform bill ended some uncertainty hanging over markets and prompted investors to return cautiously to riskier assets.

But gains were likely to be limited as investors awaited key U.S. housing data later in the day (1400 GMT) for clues on the state of the U.S. recovery, which is key to a sustained global rebound from the worst financial crisis in generations.

Housing market weakness and high unemployment have been a persistent drag on the world's largest economy, in sharp contrast to a rapid recovery in Asia which has seen foreign investors flocking to the region's stocks, bonds and currencies.

"Market players are feeling a sense of reassurance about economic conditions, which look strong especially in emerging market countries," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management in Japan.

"So stocks that have exposure to such markets are on solid footing," Akino said.

The MSCI index of Asia Pacific stocks outside Japan rose 0.8 percent to 418.92, clawing towards a two-month peak of 422.64 hit last week and putting it back in positive territory for the year to date.

Mining and oil company shares rose as commodities prices stabilised after losing ground on Tuesday. Chinese oil producer CNOOC rose 1.3 percent, while global miner BHP Billiton climbed 1.1 percent in Australia.

Tech shares were also strong gainers across much of the region, with expectations of stronger consumer demand for flat screen TVs and other gadgets boosting major producers such as Samsung Electronics, which rose 1 percent.

Japan's benchmark Nikkei 225 average bucked the broader trend, however, slipping 0.5 percent as recent gainers such as Canon Inc lost steam and as investors cautiously watched moves in the yen.

Still, Toshiba Corp jumped 3.6 percent after it said it was in talks with a company backed by Microsoft Corp Chairman Bill Gates to jointly develop advanced nuclear reactors.

The biggest risk for Asian equities is if the U.S. economy slows down again, but such worries are unlikely to emerge in the near-term, especially as the U.S. Federal Reserve is likely to keep interest rates at super-low levels for at least a few more months, Akino said.

"For the time being, I think equities will stay on a rising trend, with market players focusing on corporate earnings," he said.

GREEK DANCE

The euro was largely steady from late U.S. levels at $1.3560 and edged up 0.2 percent to 122.40 yen However, continuing disagreement between Germany and other European states over financial support for debt-laden Greece was likely to weigh on the euro heading into an EU summit at the end of the week.

"Even though we saw a sharp recovery overnight, probably thanks to the passage of the healthcare reform bill in the U.S., concern over Greece and tightening, not just in China but also in India, should linger in the market," said Masafumi Yamamoto, chief FX strategist for Japan at Barclays Capital.

"There's very partial risk aversion away from the euro and some assets - but overall risk appetite is still there."

The Reserve Bank of India, citing intensifying inflationary pressures and a steady economic recovery, caught investors off guard with a 25 basis point tightening late on Friday, weighing on global markets.

Crude prices eased 40 cents to $81.22 per barrel, with investors awaiting U.S. oil inventory data later in the day, while gold edged up after hitting its lowest in nearly a month on Monday.

Shanghai's benchmark third-month copper futures contract rose as much as 1 percent before paring gains.

U.S. Treasuries were little changed, holding gains from the previous day but capped ahead of a string of auctions this week. * For state of play of Asian stock markets, click: * For Reuters Global Investing Blog, click: http://blogs.reuters.com/globalinvesting; * F MacroScope Blog, click: http://blogs.reuters.com/macroscope * For Hedge Fund Blog Hub, click: http://blogs.reuters.com/hedgehub) (Additional reporting by Aiko Hayashi and Charlotte Cooper) (Editing by Kim Coghill)

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