GLOBAL MARKETS-Asian shares up, China trade data helps sentiment

Wed Apr 10, 2013 1:15am EDT

* MSCI Asia ex-Japan up 0.3 pct, Nikkei close to near 5-yr highs

* Yen stays near multi-year lows vs major currencies

* China imports beat forecast, hints at recovering domestic demand

* Markets keep eye on developments in North Korea

By Chikako Mogi

TOKYO, April 10 (Reuters) - Asian shares edged higher on Wednesday as Chinese trade data signalled a recovery in the world's second largest economy, adding to an improving sentiment after Wall Street closed at a record high overnight, while the yen remained under pressure.

U.S. stock futures were down 0.1 percent, suggesting a soft Wall Street open after the Dow Jones industrial average ended Tuesday at a lifetime high.

The MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, pulled higher by its materials sector with a 1.3 percent jump, as iron ore prices recovered.

China saw a mild trade deficit of $884 million in March as a forecast-busting 14.1 percent year-on-year surge in imports eclipsed export growth of 10 percent, signalling that domestic demand was gathering the steam needed to drive economic recovery.

Haibin Zhu, chief China economist at JP Morgan in Hong Kong said the surge in imports in March could help dispel a major concern over trends in domestic demand that had been prompted by weakness of import growth in previous months.

"The stronger than expected import growth for March suggests this cycle is probably coming to a turning point," Zhu said. "If domestic demand turns out to be stronger than expected, it's definitely positive for the economic outlook."

Australian shares lagged with a 0.1 percent drop, with a retreat in financials offsetting a rally in miners. But the Australian dollar hit a 2-1/2-month high of $1.0518 after the Chinese data. Recovery in China, Australia's largest trading partner, raises hopes for demand for Australian goods.

Seoul shares rose 0.6 percent, with investors focusing on the chance the country's central bank may cut interest rates when it meets on Thursday, rather than on concerns about North Korea.

South Korea said it has asked China, North Korea's only major ally, to rein in the hermit state and has raised its surveillance after the North moved at least one long-range missile in readiness for a possible launch.

London copper fell 0.5 percent to $7,595 a tonne as investors took profits from Tuesday' two-week highs, but Chinese data supported.

"We've probably seen the lows in many of the base metals for now," said economist Alexandra Knight of National Australia Bank in Melbourne. "We're still seeing a modest recovery in the U.S. and we expect economic growth in China to extend over the first half, so there's plenty of support for demand."

NIKKEI RIDING ON BOJ

In Japan, the Nikkei stock average climbed 0.6 percent to approach Tuesday's near five-year highs, as the Bank of Japan's aggressive monetary easing stimulus boosted prospects for better corporate earnings, particularly exporters as it has pushed the yen sharply lower against major currencies.

"The sharp advances of the Nikkei over the last 5 months should not necessarily be a warning sign of speculative bubble. The Nikkei may merely be playing catch up," said Ashraf Laidi, chief global strategist at City Index, in a note to clients.

He noted that the Nikkei was up 89 percent from its low of October 2008 while the Standard & Poor's Index has risen 133 percent from its low of March 2009.

The S&P hit an all-time high last month while the Nikkei at around 13,290 currently is still only about a third of its lifetime high hit in December 1989.

"As the long as the (Nikkei) index avoids a close below 11,820 this month or 12,550 next month, the road to 14,500, appears intact," Laidi said.

The yen remained near recent lows. The dollar was at 99.03 yen and the euro traded at 129.57 yen, while the Aussie was at 104 yen.

On Tusday, the dollar hit 99.67 yen, its highest since May 2009, the euro climbed as far as 130.09 yen, its highest since January 2010, and the Aussie dollar soared to 104.35 yen, the highest since July 2008.

"The BO's recent policy action will undoubtedly lead to the Japanese picking up their offshore search for yield. We are looking closely for signs of where the wall of Japanese money may be heading next," Westpac said in a research note.

Tokyo gold futures rose to 5,076 yen per gram, just below their record high of 5,081 yen hit in February, in a move seen as a reaction to the BOJ's unprecedented expansionary steps and the yen's weakness.

"The BOJ's steps may be waking up Japanese investors to the need to hedge against the risk of inflation," said Koichiro Kamei, managing director at financial research firm Market Strategy Institute, adding that gold could also act as a hedge against further falls in the yen.

U.S. crude futures eased 0.3 percent to $93.91 a barrel while Brent inched up 0.1 percent to $106.37.

Investors will closely watch the minutes of the U.S. Federal Reserve's last monetary policy meeting due later in the day for any clues on whether the Fed would slow or halt its asset buying stimulus.