* MSCI Asia ex-Japan adds 0.8 pct, Nikkei jumps 2.9 pct
* Chinese data confirms recovery on track
* Yen hits new lows vs dollar, euro on U.S. data, BOJ
* European shares likely subdued
By Chikako Mogi
TOKYO, Jan 18 Asian shares advanced on Friday as
encouraging data from the United States and China boosted
prospects for the global economy, while the yen hit new lows
ahead of next week's Bank of Japan meeting.
Both the Tokyo and Hong Kong stock markets surged to
multi-month highs on the upbeat sentiment.
China's economy grew 7.9 percent in the fourth quarter of
2012 from a year earlier, strengthening from 7.4 percent in the
third quarter -- the lowest since the depths of the global
The bounce snapped seven straight quarters of slowing
expansion, and augurs well for risk-on trade amid an improving
outlook for the global economy. The positive news from China
comes on top of strong U.S. labour and housing market reports,
buoying sentiment for the world's two largest economies.
"It's kind of like a golden spot (for China) - stronger
growth, but not strong enough to trigger a lot more inflationary
concern. That's perfect for equity markets," said Dariusz
Kowalczyk, Asia ex-Japan senior strategist at Credit Agricole
CIB in Hong Kong.
The MSCI's broadest index of Asia-Pacific shares outside
Japan rose 0.8 percent, carrying positive
momentum from the strong U.S. data on Thursday.
The pan-Asian index gained as much as 0.8 percent to a
17-1/2-month high and was set for a weekly gain of 0.7 percent.
Hong Kong shares hit 19-1/2-month highs and Shanghai
shares were set for their first gain in three days.
"The (GDP) data reaffirmed views that China will not see a
hard landing as feared at one point and that the economy is on a
more solid footing than last year and resuming a sustainable
growth level of 7 to 8 percent," said Tomomichi Akuta, senior
energy researcher at Mitsubishi UFJ Research and Consulting in
Industrial commodities gained on a brightening growth
outlook, pinning platinum and palladium near
multi-month highs hit on Thursday, while oil prices erased
earlier losses, with U.S. crude up 0.1 percent to $95.61
a barrel and Brent futures adding 0.2 percent to $111.27.
Other Chinese data released showed industrial output grew
10.3 percent in December from a year ago, above an expected 10.1
percent increase, and retail sales in December rose 15.2 percent
on the year ago, also topping an estimated 14.9 percent rise.
Tokyo's benchmark Nikkei average surged 2.9 percent
for its biggest daily gain in 22 months as the yen resumed its
downtrend, improving earnings prospects for Japanese exporters.
The Nikkei was set for a 10th straight week of gains, the
longest since 1987.
European markets are seen subdued, with financial
spread-betters predicting London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX would open flat to
down as much as 0.1 percent. U.S. stock futures were
barely moved, pointing to a quiet Wall Street start.
Robust equities boosted Asian credit markets, tightening the
spread on the iTraxx Asia ex-Japan investment-grade index
by 4 basis points.
YEN WEAKNESS RESUMES
The strong U.S. data and mounting expectations for more
aggressive easing by the Bank of Japan (BOJ) next week lifted
the dollar to its highest since June 2010 of 90.21 yen,
and the euro to its peak since May 2011 of 120.73 yen.
Expectations that the new Japanese government will pursue
massive fiscal spending and push for more aggressive BOJ easing
to drive Japan out of years of deflation and economic slump have
spurred heavy yen selling since November.
Sources told Reuters the BOJ will at its Jan. 21-22 meeting
consider removing the 0.1 percent floor on short-term interest
rates and commit to open-ended asset buying until the 2 percent
inflation target is reached.
The actual outcome may disappoint some in the markets but
the yen may not escape further selling given a growing view in
the market that Prime Minister Shinzo Abe's government remains
determined to rectify excessive yen strength over the years.
"I would not underestimate the government's intention. Any
dip will likely be shallow as I believe there are still many who
haven't caught up with (the yen selling)," said Hiroshi Maeba,
head of FX trading Japan for UBS in Tokyo, who said 95 yen was
possible by March while support looked firm around 88 yen.
Investor nervousness was evident in the options market, with
dollar/yen one-month implied volatility hitting its highest
since September 2011 around 12.12 percent.
Interest in buying dollar options have been growing, and
dollar/yen risk reversals showed a bias for yen
puts/dollar calls hovering near a two-month high.