Asian stocks rise on stimulus hopes

HONG KONG - Asian stocks rose for a second day Tuesday as a strengthening yuan and hopes for more central bank stimulus gave investors relief from the mauling that markets have suffered so far this year.

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KEEPING SCORE: Japan's benchmark Nikkei 225 index added 0.2 per cent to 16,054.43 after soaring 7.2 per cent the day before, which was its biggest daily gain since September. South Korea's Kospi rose 1.4 per cent to 1,887.05 and Hong Kong's Hang Seng advanced 1.3 per cent to 19,159.76. The Shanghai Composite Index in mainland China gained 3 per cent to 2,827.84 and Australia's S&P/ASX 200 was up 1.4 per cent to 4,810.00. Benchmarks in Taiwan and most of Southeast Asia also rose.

STIMULUS HOPES: With U.S. markets closed for a holiday and therefore providing no guidance in either direction, the global stock rally extended into a second day. Investor sentiment remained positive that central banks would continue to ease monetary policy thanks to comments from the head of the European Central Bank. With the ECB set to discuss policy measures on March 10, Mario Draghi told the European Parliament on Monday that the bank has a range of instruments it can deploy if it decides more stimulus is needed. Earlier, a disappointing report on Japanese economic growth also raised hopes for more policy easing.

RENMINBI RELIEF: China's strengthening currency also helped boost sentiment. The yuan hovered near its strongest level so far this year a day after the central bank guided the currency, also known as the renminbi, sharply higher. Meanwhile, new yuan loans jumped 71 per cent in January, the official Xinhua news agency reported Tuesday, suggesting solid demand in the world's No. 2 economy.

ANALYST'S TAKE: "Since the start of January everything went south and we really needed some positive news," said Jackson Wong, associate director at Huarong International Securities. "Factors that were affecting the markets negatively have turned positive now: the yen is weaker, the renminbi is stronger, global markets like the U.S. are stabilizing. All the negative catalysts from January are turning better."

ENERGY: Oil futures bounced higher, with benchmark U.S. crude rising $1.28, or 4.4 per cent, to $30.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.23 to settle at $29.44 a barrel on Friday. Brent crude, a benchmark for international oils, added $1.38 to $34.77 a barrel in London.

EUROPE JUMP: Britain's FTSE 100 closed 2 per cent higher on Monday at 5,824.28 and Germany's DAX gained 2.7 per cent to 9,206.84. France's CAC 40 rose 3 per cent to close at 4,115.25.

CURRENCIES: The dollar strengthened to 114.59 yen from 114.54 yen in Monday's trading. The euro slipped to $1.1155 from $1.1167.


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