* MSCI Asia ex-Japan scales highest since Aug 2011
* Nikkei hits 52-month high
* Japan logs biggest-ever monthly trade deficit in January
* Yen jittery as doubts emerge over Japan's commitment to
* European shares likely to inch lower
By Chikako Mogi
TOKYO, Feb 20 Asian shares scaled their highest
levels since August 2011 on Wednesday after an improving global
economic outlook whetted investor appetite for risk, while the
yen firmed amid doubts over Japan's commitment to drastic
Asian shares have been on an uptrend as risks from the euro
zone debt crisis and the U.S. fiscal impasse abated and signs of
recovery emerged in major economies including China. Corporate
earnings have also been generally positive.
"The tide continued to push higher for equity markets across
Asia today, with solid leads from Europe and the U.S. enough to
keep traders in a buying frame of mind," said Tim Waterer,
senior trader at CMC Markets.
News of new possible mergers boosted U.S. stocks on Tuesday,
pinning the benchmark Standard & Poor's 500 Index near a
five-year high, while European shares rose after the German ZEW
investor sentiment index rose to a three-year high.
European markets will likely consolidate, with financial
spreadbetters predicting London's FTSE 100, Paris's
CAC-40 and Frankfurt's DAX would open down 0.1
percent. U.S. stock futures were flat to suggest a
subdued start for Wall Street.
The MSCI's broadest index of Asia-Pacific shares outside
Japan added 0.8 percent, up for a third day in a
row, led by a 1.9 percent gain in its technology sector
. The index has risen 4.3 percent year to date.
South Korean shares outperformed their peers with a
1.8 percent jump to a one-month high, as foreigners stepped up
buying and a pause in the yen's falling trend soothed sentiment.
Australian shares rose 0.3 percent, extending their
bull run at 4-1/2-year highs on improving sentiment overseas and
a better-than-expected domestic earnings season. The Australian
market has risen nearly 10 percent this year.
Positive growth in Southeast Asia has drawn foreign
investors, keeping regional stocks robust. The Philippines stock
market extended gains to a record high while Bangkok's
SET index hit a fresh 18-year high.
Rallying stocks weighed on assets perceived as safe-haven,
with spot gold inching up 0.2 percent to $1,606.84 an
ounce but stuck near a six-month low.
Asian credit markets took their cues from stocks, tightening
the spread on the iTraxx Asia ex-Japan investment-grade index
by two basis points.
London copper edged up 0.2 percent to $8,067.75 a
tonne, off Tuesday's three-week lows.
"A shift to cyclicals from defensives has come full circle
and investors are now looking at sector-specific factors within
an asset class, selecting those with a tight supply/demand
outlook," said Naohiro Niimura, a partner at research and
consulting firm Market Risk Advisory.
He said industrial metals and oil are favoured by investors.
Within base metals, copper will likely rise further as economic
activity increases, as will Brent crude oil, while U.S. crude
was seen weighed by ample supply.
U.S. crude steadied around $96.72 a barrel but Brent
eased 0.2 percent to $117.31.
Platinum and palladium also have further upside scope due to
The rise in equities weighed on assets perceived as
safe-haven, such U.S. Treasuries and gold on Tuesday. Spot gold
inched up 0.2 percent to $1,607.94 an ounce, but hovered
near a six-month low hit the day before.
YEN INSTABILITY RISES
Tokyo's Nikkei stock average closed 0.8 percent
higher at its highest close since late September 2008.
The yen remained jittery, swinging in narrow ranges on
concerns Japan may not be able to pursue as strong a
reflationary policy mix as previously perceived.
The government delayed nominating a new Bank of Japan
governor, fuelling talk of friction between the prime minister
and the finance minister over who is best suited to implement
the bold steps needed to reignite the economy.
The G20 meeting last weekend gave tacit approval to a weak
currency as long as it was as a result of domestic monetary
easing, but maintained its traditional opposition to currency
manipulation aimed at fostering exports and growth of one
country at others' expense.
"In light of the G20 statement to avoid competitive
devaluation, it will be difficult to talk down the yen
specifically. I think the onus now is on policy to do the work,"
said Sim Moh Siong, FX strategist for Bank of Singapore.
The dollar fell 0.4 percent to 93.15 yen, off its
highest since May 2010 of 94.465 hit on Feb. 11. The euro eased
0.3 percent to 124.91 yen. It touched a peak since
April 2010 of 127.71 yen on Feb. 6.
Japan logged its biggest monthly trade deficit on record in
January, underscoring the country's deteriorating trade balances
and accenting the yen's weak fundamental trend.
Sterling was under pressure on growing speculation the UK
could soon lose its prized triple-A credit rating. Sterling
traded at $1.5444, having plumbed a seven-month low at
$1.5414 in New York.
Investors remained wary of possible U.S. federal spending
cuts and outcome of the upcoming Italian election. They also
awaited the release later in the session of the minutes of the
Federal Reserve's January policy meeting for clues to its future
The ZEW report was a positive sign ahead of the more
important euro zone flash PMIs on Thursday and Germany's IFO
business sentiment on Friday, said Vassili Serebriakov, a
strategist at BNP Paribas.
The euro extended its gains, rising 0.2 percent to $1.3413