TOKYO (Reuters) – Asian shares edged higher on Wednesday, buoyed by rising global equities overnight on an improving global economic outlook, while the yen resumed its decline.
News (NasdaqGS: NWS – news) of possible fresh mergers boosted U.S. stocks on Tuesday, pinning the benchmark Standard & Poor’s 500 Index near a five-year high, while a stronger-than-expected rise in the German ZEW investor sentiment index to a three-year high supported European stocks.
The rise in equities weighed on assets perceived as safe-haven, such U.S. Treasuries and gold on Tuesday. Spot gold was steady around $1,604.41 an ounce early on Wednesday after falling near a six-month low the day before.
The MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.3 percent.
Australian shares rose 0.3 percent, extending a rally that has taken them to 4-1/2 year highs, with global miner BHP Billiton Ltd lagging slightly after its half-year profit dropped sharply and it appointed a new CEO.
South Korean shares opened up 0.6 percent, after a near four-week closing high on Tuesday.
Tokyo’s Nikkei stock average opened 1 percent higher.
The yen resumed its decline early on Wednesday after firming in the previous session on concerns Japan may not be able to pursue as strong a reflationary policy mix as previously thought.
A week-long delay in the government nominating a new Bank of Japan governor fuelled talk of friction between the prime minister and the finance minister over who should run a central bank charged with taking bold action to reignite the economy.
The dollar rose 0.2 percent to 93.71 yen, near its highest since May 2010 of 94.465 hit on February 11. The euro also added 0.2 percent to 125.50 yen. It touched a peak since April 2010 of 127.71 yen on February 6.
Sterling was under pressure on growing speculation the UK could soon lose its prized triple-A credit rating. Sterling traded at $1.5428, having plumbed a seven-month low at $1.5414 in New York.
“Markets continued to consolidate while reallocation trades helped risky assets to outperform and the USD to come under some pressure,” said Sebastien Galy, strategist at Societe Generale (Paris:FR0000130809 – news) , said in a note to clients.
“Fears regarding the UK are steadily rising reinforcing a bearish tendency in the pair. We remain short GBP, CHF, JPY and AUD,” he said, adding that the market will use any bearish excuse to sell the yen.
Japan logged its biggest monthly trade deficit on record in January, underscoring the country’s deteriorating trade balances and accenting the yen’s weak fundamental yen trend.
Investors remained wary of the possible U.S. federal spending cuts and outcome of the upcoming Italian election, limiting losses in sovereign bonds.
The ZEW report was a positive sign ahead of the more important euro zone flash PMIs on Thursday and Germany’s IFO business sentiment on Friday, said Vassili Serebriakov, a strategist at BNP Paribas (Milan: BNP.MI – news) .
U.S. crude steadied around $96.68 a barrel.
(Editing by Eric Meijer)