RTRS: Asia stocks at 1-month high as bears squeezed
Asian stocks climbed on Tuesday, with banks extending gains on hopes the struggling global financial system is stabilizing, despite reports showing the U.S. economy is deteriorating further.
The dollar edged higher against the euro and the yen while U.S. Treasuries were steady, awaiting word on whether the Federal Reserve would buy government debt to stimulate the economy.
Barclays Plc (BARC.L) said on Monday it has had a strong start to the year, echoing upbeat comments in recent weeks from Citigroup (C.N), JPMorgan (JPM.N) and Bank of America (BAC.N) which have sent battered banking shares higher.
The rebound has squeezed some investors who bet against equities, forcing them to buy back shares, but analysts are divided over whether the rally can be sustained without a broad recovery in investor confidence.
Wall Street snapped a four-day winning streak overnight after American Express Co said its credit card default rates soared last month, hammering home the heavy toll the financial crisis has had on U.S. consumers.
U.S. industrial output fell to its lowest level in almost seven years in February, while manufacturing in New York State slumped further this month, data on Monday showed.
"We still can't really relax, since we won't know the full details of this profit until quarterly results come out, and there's still a lot of uncertainty," said Takashi Ushio, head of the investment strategy division at Marusan Securities in Japan.
"But they do seem to have pulled back from the worst danger."
The MSCI index of Asia Pacific shares traded outside Japan .MIAPJ0000PUS rose 0.75 percent to a one-month high, with the materials and consumer staples sectors providing the most support.
Japan's Nikkei share average .N225 rose 1.5 percent to its highest intraday level since Feb 12. On a 20-day rolling basis, the Nikkei's 2.4 percent gain -- though meager -- has outperformed the 0.3 percent loss on European stocks .FTEU3 and a 2.6 percent decline in U.S. shares .SPX.
Australia's benchmark S&P/ASX 200 index .AXJO rose 1.7 percent, powered by the country's banks. Shares of Westpac Bank (WBC.AX) rose 2.5 percent, while Commonwealth Bank of Australia (CBA.AX) climbed 1.7 percent.
Hong Kong's Hang Seng index .HSI underperformed the region and was mostly unchanged on the day. The index has had a five-day rally, enticing investors to lock in profits while they can, though a shift out of bets against HSBC (0005.HK) pushed the shares of Europe's biggest bank up 2.5 percent.
CENTRAL BANKS MULL BOND BUYS
U.S. Treasuries were largely steady ahead of a two-day policy meeting of the Federal Reserve.
The yield on the benchmark 10-year note has been unable to rise above 3 percent after four attempts in the last few months, with investors wondering if the Fed will soon start buying long-dated Treasuries to drag rates lower in other markets.
