Asian shares hit 7-month highs, oil at $59... |
But analysts were cautious ahead of data on Japans gross domestic product on Wednesday, which is forecast to show the worlds second-largest economy contracted 4. 2 percent in January to March, likely its worst quarterly contraction since World War Two.
"Nobody really wants to take on new risk ahead of this," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.
"At the same time, theres a bit of risk from currency movements, and while the dollar recovered yesterday against the yen on a Japanese officials comments amounting to verbal intervention, these gains are shaky. "
U. S. stocks rallied on Monday as better-than-expected results from the No. 2 U. S. home improvement retailer, Lowes Cos Inc N> , helped spark broad-based buying on hopes consumer spending is stabilising. A revival in badly battered U. S. consumer confidence is key to a broader global recovery.
The Dow Jones industrial average gained 2. 85 percent to 8,504. 08, the Standard & Poors 500 Index rose 3. 04 percent to 909. 71 and the Nasdaq Composite Index advanced 3. 11 percent. S&P futures were steady in Asian trade.
POSITIVE BUT CAUTIOUS
Officials at the World Bank, European Central Bank and U. S. Treasury also offered cautiously upbeat comments, with Treasury Secretary Timothy Geithner saying the U. S. economy had "clearly stabilised" although he warned things would remain "bumpy".
The MSCI index of Asian stocks outside Japan hit its highest since October, although Indias main stock index slipped after soaring more than 17 percent on Monday as investors cheered a decisive election victory by the ruling coalition, which could open the way for more economic reforms.
Miners including BHP Billiton helped lift Australian shares by 2 percent, while energy stocks in Hong Kong soared after a jump of nearly 5 percent in crude prices on Monday.
Oil prices steadied around $59 a barrel on Tuesday after climbing on concerns about supply following unrest in Nigeria, where militants threaten to disrupt crude exports, and following a fire in a key U. S. refinery.
The dollar, which hit a two-month low of 94. 55 yen on Monday before rebounding more than 1 percent, rose a further 0. 1 percent to 96. 40 yen but lost ground to the Australian dollar edging back towards a recent seven-month low.
The Australian dollar also stood within sight of a recent seven-month peak on the yen, underpinned after Reserve Bank of Australia Governor Glenn Stevens said domestic interest rates were "pretty low" but then also cautioned against expectations for a quick recovery.
"The yen remains vulnerable as firmness in stocks bolster risk appetite, with people encouraged to buy higher-yielding currencies such as the Australian dollar against the yen," Tsutomu Soma, a senior manager at Okasan Securities in Tokyo.
The euro and sterling also held on to gains made against both the dollar and yen the previous day, with sterling edging towards its highest since early January against the dollar.
Debt prices retreated with the yield on the benchmark 10-year Japanese government bond edging up 1 basis point to 1. 410 percent and the front-month JGB futures contract slipping 0. 16 point to 137. 15
U. S. Treasuries were little changed after losses the previous day, with bond investors cautious ahead of housing starts data which could enhance optimism about economic recovery.
Benchmark 10-year notes rose 1 basis point to yield 3. 236 percent, after climbing 10 basis points on Monday.
Gold rose on light cash buying to around $920 per ounce, but investors were cautious that improved U. S. housing data could further dull the metals appeal as a safe haven from volat.
Asian shares hit 7-month high