* MSCI Asia ex-Japan hits highest since July 2011, Nikkei
* South Korea joins monetary easing race, Seoul shares jump
* Australia reports strong jobs data, China CPI rises
* European shares seen mixed
By Chikako Mogi
TOKYO, May 9 Strong Australian jobs data and a
surprise interest rate cut by South Korea underpinned Asian
shares on Thursday after Wall Street's extended record run, but
prices were capped by concerns that a pick-up in inflation in
China will limit its policy options.
"Traders are growing ever more uneasy about this rally,
where one has to ignore the fundamentals and put your blind
faith in the central banks," Jonathan Sudaria, a trader at
Capital Spreads, said in a note to clients.
"Considering that 5 OECD central banks have cut rates in May
alone so far, those who have bet against the rally have become
martyrs to their belief that fundamentals still matter."
European stock markets were seen narrowly mixed, with
financial spreadbetters predicting London's FTSE 100,
Paris's CAC-40 and Frankfurt's DAX would open
up as much as 0.2 percent and down as much as 0.2 percent. The
FTSEurofirst 300 index of top European shares finished
at a five-year closing high the day before.
U.S. stock futures were steady, suggesting a subdued
Wall Street open after the Standard & Poor's 500 Index
and the Dow Jones industrial average ended at record
peaks on Wednesday.
Japanese stocks, which earlier inched closer to striking
distance of fresh five-year highs, gave up all early gains to
ease 0.3 percent.
The Nikkei stock average earlier rose as much as 0.9
percent to 14,409.82 points, just off Wednesday's intra-session
peak of 14,421.38, its highest since June 2008.
MSCI's broadest index of Asia-Pacific shares outside Japan
edged up 0.1 percent, after climbing as much as
0.5 percent to its highest since July 2011 earlier in the day.
South Korean shares outperformed their peers,
jumping 1.1 percent after the central bank unexpectedly cut
interest rates by 25 basis points to 2.50 percent, the first cut
in seven months, as weak industrial growth suggested the economy
was not recovering as quickly as expected.
"Bank of Korea's rate cut decision removes policy risk that
had weighed on South Korean share market," said Kim Young-june,
a market analyst at SK Securities.
Australian shares failed to sustain gains made after
a strong local labour report, which helped pare market bets for
an interest rate cut in June, after the Reserve Bank of
Australia lowered rates earlier this week.
The data drove the Australian dollar to a session
high of $1.0255 from $1.0185 before the data.
Australian shares eased 0.2 percent as data from
China, its largest export market, showed annual consumer
inflation accelerated slightly more than expected in April while
factory prices fell for a 14th consecutive month, highlighting
the dilemma facing the central bank as it balances support for
the economy against the threat of rising prices.
Stock markets in Hong Kong fell 0.5 percent and
Shanghai slipped 0.9 percent, snapping winning streaks.
"We have some profit-taking pressure after the inflation
data, which provided a catalyst," said Ben Kwong, chief
operating officer at securities house KGI Asia.
CURRENCIES TAKE BACK SEAT
Still, global fund flows into equities were seen remaining
intact as global monetary easing depresses returns on bonds
while unclear prospects of world economic growth weigh on
In contrast to the clear uptrend in global equities, major
currencies have lost direction, having rallied sharply against
the yen over the past six months on hopes for aggressive
reflationary policies from deflation-trapped Japan.
"The phase in which investors can make huge profits from
betting on big cash currency positions is over, and giving way
to equities," said a senior official at a big Japanese investor.
"Global equities markets are buoyed by the monetary easing
race, regardless of economic fundamental outlooks, and as long
as central banks keep their accommodative stance, the uptrend in
stocks will remain in place."
Global equities drew support overnight from Chinese trade
data and signs that Germany may escape a sharp slowdown after
the euro zone's largest economy said its industrial output
unexpectedly rose in March, following a similarly surprising
rise in industrial orders.
The euro remained resilient against the dollar, inching up
0.1 percent to $1.3159 but easing 0.2 percent against the
yen at 129.91 yen. The dollar fell 0.3 percent against
the yen to 98.72 yen.
A senior official at a big Japanese investor noted that the
euro's underlying strength may stem from the European Central
Bank's conventional policy of cutting interest rates rather than
implementing unconventional quantitative easing.
Spot gold was lacklustre, stuck near $1,472.80 an
ounce, as bullion was weighed down by continuing outflows from
bullion exchange-traded funds which hit their lowest since early
U.S. crude futures fell 0.2 percent at $96.46 a
barrel and Brent steadied around $104.33.