* Asian stocks hit 3-week highs, led by rally in Indian
* Upbeat U.S. data also cheers, but Fed tapering worries
* BOJ, as expected, maintains massive stimulus programme
* European stocks seen opening up, ECB rate review in focus
By Ian Chua
SYDNEY, Sept 5 Asian stocks rose to three-week
highs on Thursday as Indian shares and the rupee rallied a day
after the country's new central bank chief unveiled measures to
support the currency and the banking sector.
But worries the U.S. Federal Reserve will soon scale back
stimulus kept markets in check. MSCI's broadest index of
Asia-Pacific shares outside Japan advanced 0.6
percent, having earlier hit a high last seen on Aug. 19.
Financial spreadbetters expect modest opening gains for key
European markets, mirroring Asia's performance.
India's benchmark BSE index put on 2.1 percent,
South Korea's KOSPI rose 1.0 percent, while Thai stocks
climbed 1.6 percent.
Tokyo's Nikkei closed a touch firmer, having lost a
bit of steam after hitting a one-month high. Still, it is up an
enviable 5 percent so far this week.
The moves followed a second day of gains on Wall Street
spurred by another set of upbeat U.S. data, though the figures
have also added to the chance of the Fed tapering its stimulus
"Strong car sales in the U.S. again lifted market confidence
in the economy, and lifted expectations that the U.S. Federal
Reserve will start cutting back its stimulus this month," said
Isao Kubo, an equity strategist at Nissay Asset Management.
"There is a sense of caution in the market."
Markets appeared to have cast aside worries about Syria for
the moment, even as a possible U.S. military strike moved one
step closer after a Senate committee voted in favour of action,
clearing the way for a vote in the full Senate, likely next
CENTRAL BANK FOCUS
Former IMF chief economist Raghuram Rajan took the helm at
the Reserve Bank of India in grand style on Wednesday,
announcing an array of measures to liberalise financial markets
and the banking sector.
The rupee rose to as high as 65.53 per U.S. dollar,
pulling well away from a record low around 68.85 set last week.
Radhika Rao, an economist at DBS in Singapore, said the path
of action plotted by the new governor was a welcome move.
"Still, the external drivers of the rupee weakness will
continue to dictate the momentum, along with the urgent need to
address domestic structural pitfalls - fiscal and current
account deficits, along with reviving investment activity," she
said in an email to clients.
As expected, the Bank of Japan maintained the massive
monetary stimulus launched in April and revised up its outlook
for the economy following a two-day review. Governor Haruhiko
Kuroda will give a media briefing later in the day.
The European Central Bank takes centre stage next, although
it is widely seen keeping rates low for an "extended period".
U.S. data on Wednesday showed auto sales raced past
expectations in August, ahead of the closely-watched payrolls
data on Friday, extending a string of upbeat U.S. data that has
reinforced expectations the Fed will soon start to pull back
Such expectations have underpinned the U.S. dollar, which
remained near a six-week high against a basket of major
The euro briefly popped above $1.3200, before
slipping back 0.3 percent to $1.3173. It remained within
spitting distance of a six-week low of $1.3138 plumbed earlier
Against the yen, the dollar reached a one-month high of
99.99, while the euro retreated slightly from a two-week
peak around 131.81 yen reached overnight.
Among commodities, Brent crude oil added 12 cents to
$115.05 a barrel, while copper futures were flat at
$7,126.00 a tonne.
India, along with many emerging markets, has also been hit
hard by an outflow of funds as international investors
positioned for a world with less central bank support.
The IMF, in a note prepared for the Group of 20 meeting in
St. Petersburg, warned that emerging countries were particularly
vulnerable to a tightening of U.S. monetary policy.
It urged strengthened global action to revitalise growth and
better manage risks, adding some downside risks have become more