Asian shares buoyed by ECB easing hopes, BOJ hold lifts yen

By Hideyuki Sano

TOKYO (Reuters) – Asian shares hit a six-week high and the euro stayed under pressure on Wednesday as investors counted on the European Central Bank to unveil a stimulus drive, while the yen jumped after the Bank of Japan left policy unchanged.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 1.3 percent, with shares in India <.BSESN> and New Zealand <.NZ50> hitting record highs.

European shares are expected to open higher with spreadbetters seeing higher opening of up to 0.2 percent in Britain’s FTSE <.FTSE> and France’s CAC 40 <.FCHI>.

Japan’s Nikkei <.N225> bucked the trend by slipping 0.5 percent and the yen gained 0.9 percent to 117.76 to the dollar <JPY=> after the BOJ did not expand its stimulus.

While the decision had been widely expected, some players had bet on a surprise from BOJ Governor Haruhiko Kuroda, as the central bank’s inflation target for next year looks increasingly illusive.

The BOJ maintained its money-printing target while tinkering with expiring loan schemes to support bank lending. It stuck to a bullish inflation outlook for 2016 even though it cut its 2015 projections following falls in oil prices in recent months.

On the whole, global share prices have been supported in recent sessions by growing investor conviction that the ECB will adopt quantitative easing at its meeting on Thursday.

“Everyone is talking about the ECB meeting outcome,” said Kara Ordway, a market maker and trader at City Index in Sydney. “Markets are choppy because there is so much uncertainty.”

The FTSEurofirst 300 <.FTEU3> index of top European shares climbed to a seven-year high on Tuesday, led by German shares, which hit record highs.

The euro was soft at $ 1.1570 <EUR=>, having fallen from above $ 1.16 touched on Tuesday to get closer to an 11-year low of $ 1.14595 set last week.

Still, uncertainties on exactly what the ECB will do kept many investors on guard, especially given that Germany’s Bundesbank is reluctant to see large scale money-printing.

“The market appears to be looking to quantitative easing of at least 500 billion euro… but there is a chance the ECB’s action is less aggressive than some are hoping for,” said Shuji Shirota, associate director at HSBC in Tokyo.

The spectre of the ECB’s stimulus and recent volatility in global markets caused by plunging oil prices boosted demand for precious metals as a safe haven.

Gold extended its rally to a five-month high, rising above $ 1,300 per ounce for the first time since August, having risen 10 percent so far this year. It last stood at $ 1,300.90 <XAU=>.

Silver also rose to a four-month high of $ 18.32 per ounce <XAG=>, rising almost 2.0 percent on Wednesday.

U.S. debt prices also remained firm, as ever-falling European bond yields make higher-yielding U.S. bonds more attractive.

The 10-year U.S. notes yield stood at 1.797 percent <US10YT=RR>, having fallen to as low as 1.698 percent on Tuesday, its lowest level since May 2013.

Commodity prices remained under pressure, with oil falling as much as 5 percent at one point on Tuesday after the International Monetary Fund cut its 2015 global economic forecast.

Benchmark Brent crude <LCOc1> ticked up on Wednesday to trade at $ 48.33 a barrel, though it is still down 3.6 percent on the week.

(Additional reporting by Cecile Lefort in Sydney; Editing by Eric Meijer and Richard Borsuk)