* Ex-Japan Asia MSCI flat, Nikkei down 0.5 pct
* ECB expected to launch QE just as Fed winds up bond buying
* Euro hits 1-year low, seen testing $1.30
* European shares seen stepping back after big gains on
By Hideyuki Sano
TOKYO, Aug 26 Asian shares held firm while the
euro hit one-year lows on Tuesday as investors increasingly
expect the European Central Bank to expand liquidity as soon as
next week to boost the sagging euro zone economy.
Markets were still coming to terms with comments from ECB
chief Mario Draghi late last week that the central bank was
prepared to respond with all its "available" tools should
inflation drop further.
"Draghi's speech marked a turning point in ECB rhetoric...
He also confirmed that beyond liquidity injections through the
targeted longer-term refinancing operations (TLTRO) and outright
asset-backed securities (ABS) purchases, the ECB was ready to do
more if necessary," Philippe Gudin, an economist at Barclays,
said in report.
European shares are expected to step back after sharp gains
on Monday, with Germany's DAX and France's CAC 40
both seen falling 0.3 percent while Britain's FTSE
is seen up 0.5 percent in catch-up trade after a market
MSCI's dollar-denominated index of Asia-Pacific shares
outside Japan was 0.04 percent firmer, led by
0.3 percent gains in South Korean shares. Japan's Nikkei average
bucked the trend, shedding 0.5 percent on profit-taking.
The mood in the market was buttressed by the S&P 500,
which briefly topped the 2,000 mark for the first time in
history on Monday, and closed up 0.48 percent at 1,997.92.
European stocks led the rally in global equities overnight,
with many country and regional indexes climbing more than 1
percent, as investors grew convinced that the ECB could adopt
quantitative easing as soon as next week.
On Wall Street, the biggest winners were financial shares,
seen as the main beneficiary of any cheap money from the ECB at
a time the U.S. Federal Reserve is preparing to end its
Speculation that the ECB could buy debt of euro zone
countries drove down yields on bonds from Germany, France,
Italy, Spain, Portugal and Ireland and others to all-time lows.
German 10-year yields hit a record low of
0.926 percent, before pulling back to 0.95 percent.
"I suspect the ECB will announce the outline of its policy
next month and will start actual buying in October," said a
European bond trader at a European brokerage.
The euro also fell to $1.31785 in early Asian trade,
its lowest level since early September last year, with a test of
the $1.30 mark seen as inevitable. It last stood at $1.3199.
Germany's Ifo business climate index published on Monday
showed business confidence sagged for the fourth straight month,
further fanning expectations of major asset purchases by the
In contrast, the U.S. dollar was broadly firm, with its
index against a basket of currencies hitting a one-year high of
Against the yen, the dollar stepped back slightly to 103.90
yen, but still not far off its seven-month peak of 104.49
yen hit on Monday.
In the face of the greenback's broad strength, the New
Zealand dollar dropped to a six-month low of $0.8311,
hit by New Zealand's surprisingly large trade deficit.
(Editing by Shri Navaratnam and Eric Meijer)