* Yellen says considerable slack remains in economy, job
* China official PMI data improves slightly, stimulus hopes
* Gold, yen on retreat as investor risk appetite returns
* Europeans shares expected to rise; FTSE, CAC seen up 0.3
By Hideyuki Sano
TOKYO, April 1 Asian shares hit a four-month
high on Tuesday after dovish comments from Federal Reserve Chair
Janet Yellen and China's official PMI survey showing the
manufacturing sector managed to continue expanding in March.
MSCI's broadest index of Asia-Pacific shares outside Japan
rose by up to 0.4 percent to reach its highest
level since early December. European shares are expected to
gain, with both Britain's FTSE and France's CAC
seen rising 0.3 percent.
The Nikkei failed to match other indexes, falling 0.2
percent as the Bank of Japan's tankan survey showed Japanese
companies cautious on the economic outlook as a
three-percentage-point sales tax hike took effect on Tuesday.
Global shares were also supported by Fed chair Janet Yellen
reinforcing the need for an "extraordinary" commitment to
support the U.S. economy, seemingly tempering expectations of a
sooner-than-expected start to the rate-hike cycle.
In her first public speech since becoming Fed chair two
months ago, Yellen said there remains "considerable" slack in
the economy and job market.
"It seems like she expressed her own dovish ideas. There's
nothing really new and the outlook of the Fed's policy has not
changed that much but the markets like her remarks," Makoto
Noji, senior strategist at SMBC Nikko Securities.
China's official Purchasing Managers' Index increased to
50.3 in March from February's 50.2, staying above 50, which
While the PMI figure alone is hardly enough to dispel
concerns of a slowdown in China, investors' belief in China has
improved in recent weeks as they expect Beijing to adopt a
stimulus plan to meet its growth target.
Emerging markets, which suffered a sharp selloff earlier
this year on concerns about a turn in Fed policy, slowdown in
China and political instability in some countries, are showing
signs of life.
MSCI's emerging market index hit a three-month
high, having outperformed S&P 500 since late March.
Rising risk appetite undermined lower-risk assets that had
attracted safety bids last month at the height of the Ukrainian
Gold hit a seven-week low of $1,278.34 per ounce,
despite Yellen's dovish comments while the yen also slipped to a
three-week low against the dollar of 103.44 yen and a
nine-month low against the risk-sensitive Australian dollar
The euro bounced back against the U.S. dollar to fetch
$1.3774 even as softer-than-forecast inflation numbers
put more pressure on the European Central Bank to act against
the threat of deflation.
Euro zone inflation dropped to 0.5 percent in March, its
lowest level since November 2009, having been in the ECB's
"danger zone" of below 1 percent for six consecutive months.
However, not many market participants expect the ECB to act
at its policy meeting on Thursday, partly because of comments
from ECB council member and Bundesbank President Jens Weidmann
Weidmann said that the euro zone is not in a deflationary
cycle and that the ECB should not over-react to a slowdown in
inflation caused largely by cyclical factors which should prove
The immediate focus is on a barrage of manufacturing data in
Europe, which is expected to show output in most countries to
have stayed flat or weakened slightly in March.
Crude futures were off three-week highs following news
Russia was withdrawing some troops from the Ukrainian border.
U.S. crude futures stood at $101.41 per barrel, off
Friday's high of $102.24.
(Editing by Shri Navaratnam and Eric Meijer)