Global Markets: Asian shares up with eye on fiscal cliff, yen slips more

Dec 27 2012, 12:28 IST
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Asian shares rose amid caution as US lawmakers prepared to resume talks to avoid a fiscal crunch. (Reuters) Asian shares rose amid caution as US lawmakers prepared to resume talks to avoid a fiscal crunch. (Reuters)
SummaryAsian shares rose amid caution as US lawmakers prepared to resume talks to avoid a fiscal crunch.

Asian shares rose on Thursday amid caution as U.S. lawmakers prepared to resume negotiations to avoid a fiscal crunch by Dec. 31, while the yen hit a 21-month low against the dollar on the prospect of drastic monetary easing and massive state spending.

European shares were seen returning from the Christmas holiday break with a fall, financial spreadbetters predicting London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX would open down as much as 0.6 percent.

A 0.1 percent gain in U.S. stock futures suggested a firm Wall Street start. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent, with Australian shares also adding 0.3 percent. Hong Kong shares rose 0.4 percent to a near 17-month high, although Shanghai steadied after earlier touching their highest level since July.

In a sign that there may be a way to break the deadlock in the U.S. Congress, Republican House of Representatives Speaker John Boehner urged the Democrat- controlled Senate to act to pull back from the cliff and offered to at least consider any bill the upper chamber produced.

U.S. President Barack Obama will try to revive budget crisis talks which stalled last week when he returns to Washington on Thursday after cutting short his Christmas holiday in Hawaii.

"There is no easy way to resolve the U.S. fiscal cliff, but there should be a compromise at some point and that's what the market is looking for," said Tetsu Emori, a commodity fund manager at Astmax in Tokyo.

Economists warn that the "fiscal cliff" of higher taxes and spending cuts worth $600 billion could hurl the world's largest economy into recession, dragging other economies with it.

Such concerns underpinned the dollar as the fiscal impasse continues to sap investor appetite for risky assets, raising the dollar's safe-haven appeal.

"Most risk assets will probably remain range-bound until we get a clearer indication of what to expect from the fiscal cliff negotiations," said Stan Shamu, a strategist at IG Markets.

There were some signs of economic improvement in the Asian region, with data showing profits earned by China's industrial companies jumped 22.8 percent in November from a year earlier, accelerating from October's 20.5 percent.

London copper rose 1.7 percent to a one-week high of $7,932 a tonne on the positive data from China, the world's top copper buyer.

U.S. crude futures inched up 0.2 percent to $91.14 a barrel

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