Asian shares hold at 1-year high on signs of global recovery

Tags: Stock Market
Asian shares edged up to one-year highs on Friday as investors lapped up signs of improving momentum in the world's biggest economies, with Tokyo's Nikkei poised to score its first weekly gain in over a month thanks to a weaker yen.

The improved risk appetite nudged US debt yields higher and supported the dollar, which is on track to notch its first weekly gain against the yen since April.

Asian equities rode the momentum set in motion the previous session by surveys showing China's factory sector had its best performance in five months in May and US factory output growth hitting its fastest pace since February 2011.

Separately, data showed US home resales rose in April and the supply of properties on the market hit its highest level in nearly two years, promising signs for the housing market.

The confluence of positive data from the world's biggest economies soothed investor nerves though uncertainty over China's outlook is likely to keep markets on edge this year.

The solid data globally "should set the scene for a firm opening this morning followed by relatively quiet Friday trading," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"However, given the momentum of yesterday's market, it's not out of the question that buying will spill over in to today's trading," he said.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2% at 488.32 after hitting a one-year high of 488.41.

A partial distraction for regional investors came from another day of tension in Thailand's long drawn out political crisis, with the military on Thursday seizing power in a bloodless coup.

Thailand's army chief, General Prayuth Chan-ocha, who declared martial law two days earlier, said the military had to restore order and push through reforms after six months of turmoil.

After the coup, the Thai baht weakened to a low of 32.70 per dollar in offshore trading on Thursday but has recovered slightly to a narrower 32.46-32.59 range on Friday.

Meanwhile, presidential elections in Ukraine on Sunday is another potential development that could undermine investor risk appetite. The United States and European Union hope the vote will strengthen the embattled central government.

"If elections are not held in all parts of Ukraine, Russia could further question the legitimacy of the process, and this would increase geopolitical risk," said Masafumi Yamamoto, market strategist at Praevidentia Strategy in Tokyo.

The Nikkei .N225 climbed 1% as the yen remained on the back foot against the dollar. The Japanese index has gained about 2.6% so far this week.

The dollar traded little changed at 101.77 yen, and has gained about 0.2% on the week. Though the gains are modest, it is still poised to snap a four-week losing run versus the yen, helped as U.S debt yields bounced from multi-month lows this week.

US Treasury yields edged higher on Thursday after upbeat US existing home sales and factory activity lifted sentiment.

The euro eased slightly on the day to $1.365. It was within sight of a three-month low of $1.3634 set on Wednesday, hurt by rising expectations the European Central Bank will ease policy as early as next month.

Also keeping euro bulls at bay is some worry that the European Union elections over the weekend could destabilise some euro zone governments at home.

Nickel at the London Metal Exchange (LME) looked set to pocket a 3.5% weekly gain, building on the year's stellar advance after a shutdown of Indonesian supply, while copper targeted a flat weekly close following its push to two-month peaks.


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