Asian stocks firm, oil stabilizes above $60

Asian stock markets continued their strong year-end run on Thursday after a record close on Wall Street, while crude oil stabilized just above $60 a barrel after losing $3 in four sessions.

The yen, which hit a record low against the euro last week and a two-month low against the dollar this week, was steadier, finding support from renewed speculation about a Japanese interest rate rise plus a recent jump in government bond yields.

Tokyo’s Nikkei share average hit a 7-1/2-month high of 17,301.69 before ending flat at 17,224.81, while Australia’s S&P/ASX 200 index rose 0.3 percent to end at a record high for the second day in a row.

Financial bookmakers are calling the FTSE 100 about 9 points higher, the CAC 40 3-10 points higher, and DAX between 10 and 13 points firmer.

“We are just going into a year-end rally, with the market helped by a strong lead from Wall Street,” said Tony Russell, senior equities adviser with ABN AMRO Morgans, of the Sydney market.

“We should see the market close on its highs at the end of the calendar year, which will suit a lot of major funds.”

Strong metal prices boosted miners, with BHP Billiton adding 1 percent and Rio Tinto 1.6 percent.

The Dow Jones industrial average jumped 0.83 percent on Wednesday to end at a record high of 12,510.57. The Standard & Poor’s 500 Index rose 0.70 percent and the Nasdaq Composite Index 0.73 percent.

A stronger-than-expected 3.4 percent rise in new U.S. home sales in November raised hopes that the housing market may have touched bottom, which helped shares in housebuilders.

The housing data also suggested to some that the U.S.
Federal Reserve might not cut interest rates aggressively next year.

That pushed yields on U.S. Treasury bonds up sharply on Wednesday, which added to the upward pressure on Japanese government bonds (JGBs).

The 10-year JGB yield rose three basis points to 1.665 percent on Thursday, continuing a rebound from a 10-month low of 1.565 percent hit on Tuesday.

“Media reports this week seem to suggest the BOJ is trying to make market players aware of the risk of a January rate hike, after expectations receded last week,” said a senior dealer at a Japanese securities firm.

STEADIER YEN

Rising JGB yields attracted investors to the yen, which, at 118.70 per dollar, was little changed from Wednesday’s late level in New York after dropping to a two-month low of 119.23 yen on Tuesday.

The euro barely budged at $1.3125 and at 155.80 yen, off a record peak of 156.42 yen hit last week.

U.S. light crude oil futures gained 10 cents to $60.44 a barrel.

“U.S. oil data will probably show a drop in inventory levels which is likely to encourage oil prices to stay above $60,” said James Kim, a Seoul-based analyst at Woori Investment and Securities.

MSCI’s index of Asian shares outside Japan was up 0.62 percent at 0520 GMT.

Thailand’s bourse was down 0.3 percent, still unsettled by official moves last week to hold down the baht, but other Asian stock markets were steady to higher.

Hong Kong led the way, with the Hang Seng index hitting a record high just above 20,000 before dipping to 19,961.15 at 0600 GMT, up 1.2 percent from Wednesday.

South Korea’s KOSPI was up 0.5 percent at 1,433.42 at 0530 GMT, helped by gains in blue chips such as Samsung Electronics Co. Ltd., which added 0.2 percent.

“South Korean shares lagged other markets this year, but many foreign investors are seen taking out money from India and Thailand and coming back to South Korea,” said Joseph Han, an analyst at Daewoo Securities, who expects the KOSPI to rise as high as 1,700 in 2007.