* MSCI Asia ex-Japan up 1 percent; Australia and China lead
* Nikkei ends up 2.1 pct at fresh 4-1/2-year highs
* Aussie dollar and oil gain, gold capped
* European shares likely inch lower
By Chikako Mogi
TOKYO, March 6 Asian shares extended gains on
Wednesday while U.S. Treasuries and gold were capped as Wall
Street's record close spurred a shift into riskier assets amid
signs of a continuing U.S. economic recovery and globally
accommodative monetary conditions.
European markets are seen easing from a rally, with
financial spreadbetters predicting London's FTSE 100,
Paris's CAC-40 and Frankfurt's DAX would open
down as much as 0.2 percent. A 0.1 percent rise in U.S. stock
futures pointed to a steady Wall Street start.
Following a record high close in the Dow Jones industrial
average overnight, the MSCI's broadest index of
Asia-Pacific shares outside Japan gained 1
percent, adding to Tuesday's 1.3 percent surge. The index
tumbled to a nine-week low on Monday.
Resources-reliant Australian shares and Chinese
shares were among the top performers, encouraged by Tuesday's
data showing the huge U.S. services sector grew in February at
its fastest pace in a year and China announcing record public
spending in 2013. Both factors boosted hopes of economic growth
and demand for goods.
"The Chinese announcement at the start of its annual
parliament meetings stamped out any extremely bearish bias as
the message was that China will support growth but will not
tolerate upside risks such as the housing sector," said Naohiro
Niimura, a partner at research and consulting firm Market Risk
Advisory in Tokyo.
"It also removed one of the political uncertainties which
investors worried would dampen growth momentum, spurring short
covering, particularly in base metals," he said.
London copper held steady around $7,772 a tonne.
Australian stocks rallied 0.8 percent to a
4-1/2-year high as data showing the economy last quarter grew
faster than its peers in the rich world in a 21-year run of
expansion boosted sentiment.
Commodity-linked currencies, often related to risk appetite,
firmed, with the Australian dollar rising 0.2 percent
to $1.0291, above an eight-month low of $1.0116 plumbed
Hong Kong and Shanghai shares rose 1 percent
"Part of today's risk-on mode has to do with overnight U.S.
gains, but there are also several sector moves driven by news
flow coming out of the ongoing National People's Congress, which
could keep markets choppy ahead," said Larry Jiang, chief
strategist at Guotai Junan International Securities.
The dollar inched down 0.1 percent against a basket
of key currencies.
U.S. crude rose 0.2 percent to $91.03 a barrel and
Brent rose 0.3 percent to $111.91. Brent's front-month
contract for April delivery rose late on Tuesday following news
of Venezuelan President Hugo Chavez's death.
Niimura said the exit of Chavez from Venezuela's political
scene would normally put downward pressures on oil prices, as
the risk of manipulation such as controlling prices or supplies
under Chavez's dictatorship dissipates with his passing.
Japan's Nikkei stock average closed 2.1 percent
higher at a fresh 4-1/2-year peak.
BUBBLY OR NOT
Despite the increasingly positive mood, there are still some
areas of concern, namely the Chinese government's move to dampen
the country's overheated property market, a possible economic
impact from the U.S. "sequestration" spending cuts, and last
month's election deadlock in Italy.
But these worries have been eclipsed by a belief that major
central banks stand ready to provide funding and monetary policy
support to sustain the fragile recovery trend worldwide.
"That's fantastic testament to the power of easy money, in
the face of doubts about the U.S. economy now that fiscal
spending is being cut back," said Kit Juckes, strategist at
Societe Generale. "Not to mention the power of easy money to
overcome political uncertainty in Italy and recession throughout
The Bank of Japan, the Bank of England and the European
Central Bank all hold their policy meetings on Thursday.
The euro held steady around $1.3058. The dollar was
down 0.2 percent against the yen at 93.08 yen.
Barclays Capital said in a note that despite the Dow's
stellar performance overnight, implied volatility, the credit
markets, and earnings imbalances are not yet flashing warning
signs unlike in 2007 prior to the financial crisis.
"Still, while Fed policy can move stock prices, it cannot
overcome fundamentals by itself and valuation metrics are not a
compelling reason to be long stocks at current levels. We will
be watching other asset classes closely for signs the 'reach for
yield' is creating macroeconomic risks but believe we are some
way from that point," it said.
Gold traded in a narrow range and hovered around $1,575
an ounce, as investors turned their back on assets
perceived as relatively safe.
Ten-year Treasury yields inched up 1 basis point in Asia to
1.903 percent, keeping the yield near the top end of
its 1.912 percent to 1.827 percent range seen over the past
Growing appetite for risk assets helped Asian credit
markets, tightening the spread on the iTraxx Asia ex-Japan
investment-grade index by three basis points.