Asian stocks rose sharply on Friday on speculation central banks will announce additional steps to spur global growth. European Central Bank chief Mario Draghi vowed unconditional support for the beleaguered euro, boosting speculation that the central bank may unveil some concrete plans when its rate-setting governing council meets on August 2.
During a speech in London, Draghi sent out strong signals that the central bank is much more open now to policy action, which markets interpreted that it will soon engage in purchases of Italian and Spanish government bonds. Government bond yields fell sharply and the euro rallied on Thursday after the ECB comments.
Despite a lack of specifics in the minutes of the most recent Fed meeting, investors still remain hopeful and betting on further easing from the U.S. Federal Reserve as it holds a two-day policy meeting starting July 31.
Japan's Nikkei index gained 1.5 percent to hit a one-week high, as investors increased bets that the ECB will cut its main policy rate at the upcoming meeting on August 2. ECB President Draghi's comments that the central bank would "do whatever it takes to protect the euro" raised expectations that the central bank will intervene directly to buy bonds in a bid to revive the ailing economic bloc.
Exporters such as Sony, Nintendo and Mazda Motor jumped 3-6 percent as the yen eased against the euro on the back of Draghi's pledge. Canon advanced 1.9 percent after falling sharply in the previous session on earnings concerns.
Toshiba rallied 4.9 percent on a Nikkei report that its first-quarter operating profit could exceed 10 billion yen, more than double the profit recorded in the corresponding period last year. Nissan Motor rose 2.8 percent despite reporting a steeper-than-expected 19.7 percent drop in quarterly operating profit.
Social networking site operators like Gree and DeNA plunged 7-10 percent after Facebook said it incurred a net loss of $157 million in the April-June quarter because of stock compensation expenses following its IPO. Chipmaker Advantest erased early gains to end down a whopping 9.4 percent on institutional selling.
In economic news, retail sales in Japan rose 0.2 percent from a year earlier in June, the Ministry of Economy, Trade and Industry said. That was well shy of forecasts for an increase of 1.1 percent following the 3.6 percent surge in May. A separate report showed that the country's deflation accelerated in June, with consumer prices falling 0.2 percent from a year earlier, compared to a 0.1 percent drop in May.
China's Shanghai Composite index moved in a narrow range before ending 0.1 percent higher on bargain hunting in blue-chip financials. Hong Kong's Hang Seng index climbed 2 percent, marking its biggest gain in a month.
Australian shares rallied after U.S. and European stocks posted steep gains overnight on the back of positive comments from the ECB chief. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index rose about 1.5 percent each. Resource stocks rose sharply despite falling iron ore prices, which fell to an eight-month low on Wednesday on lingering worries over Chinese growth momentum. BHP Billiton rose 1.5 percent, Rio Tinto climbed 3 percent and smaller rival Fortescue Metals jumped 3.8 percent.
In the financial sector, Commonwealth, NAB, Westpac and ANZ rose 1-2 percent, while investment bank Macquarie Group advanced 2.1 percent and insurer QBE edged up 0.6 percent.
Billabong ended flat after the struggling surfwear retailer agreed to allow private equity suitor TPG to conduct due diligence on its books. Wesfarmer, Woolworths and David Jones rose 1-2 percent. Qantas added half a percent on reports the airline is prepared to sacrifice its 17-year partnership with British Airways in a bid to secure an alliance with Emirates. Phone company Telstra gained 0.8 percent after increasing phone line rental fees for households.
Seoul shares rallied, with the benchmark Kospi climbing 2.6 percent on optimism that the eurozone debt crisis will come under control. Samsung Electronics jumped 5.2 percent after reporting a record profit of $5.9 billion for the June quarter, boosted by rampant sales of its Galaxy S mobile phone and improved margins in its TV business. Shares of L G Display soared 7.3 percent.
New Zealand shares rose for a third consecutive session on optimism over Europe's moves to ease its burgeoning debt crisis. The benchmark NZX-50 index rose half a percent, with heavyweight Fletcher Building gaining a percent ahead of next week's release of the Christchurch City Council's draft central city plan.
Gold miner OceanaGold soared 5.3 percent on solid second-quarter earnings results, Australian food ingredient maker Goodman Fielder rallied 3.3 percent and Xero, the cloud accounting platform, advanced 3.3 percent, while rubber goods and milking equipment manufacturer Skellerup Holdings retreated 1.4 percent, phone company Telecom lost a percent and retailer Warehouse Group fell 0.8 percent.
Elsewhere, India's benchmark Sensex was last trading up 1.1percent, Indonesia's Jakarta Composite was up nearly 2 percent and the Taiwan Weighted average climbed 2.2 percent, while Malaysia's KLSE Composite ended little changed with a positive bias. Singapore's Straits Times index was down 0.2 percent.
On Wall Street, stocks rose sharply overnight after Draghi vowed to do whatever needed to preserve the euro. Relatively upbeat U.S. economic data on initial jobless claims and durable goods orders also generated some buying interest, while investors shrugged off a report from the National Association of Realtors showing an unexpected decrease in pending home sales in June. The Dow and the S&P 500 jumped about 1.7 percent each, while the tech-heavy Nasdaq advanced 1.4 percent.
by RTT Staff Writer
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