(Corrects second paragraph to show Australian central bank
meeting is on Tuesday)
* MSCI Asia ex-Japan flat, Nikkei opens down 0.1 pct
* Euro off highs but resilient, Aussie near highest since
late March
* RBA statement due at 0430 GMT
By Chikako Mogi
TOKYO, Aug 7 (Reuters) – Asian shares steadied on Tuesday as
investors maintained hope that Europe will take further action
to tackle its debt crisis and the United States and China will
adopt stimulus measures to boost growth.
Investors are awaiting the outcome of Australia’s central
bank policy meeting later on Tuesday, but do not expect an
easing, after improving local data. A statement is due at 0430
GMT.
Major China data on Thursday will have a greater impact as
investors look for signs the world’s second-largest economy has
improved from a lacklustre first half.
MSCI’s broadest index of Asia-Pacific shares outside Japan
was little changed, holding near a three-month
high hit the day before.
Japan’s Nikkei stock average opened 0.1 percent
lower, after Wall Street rose to a three-month high and European
shares closed at their highest level in more than four months on
Monday.
Sentiment improved as yields in Spain and Italy inched lower
on Monday on expectations the European Central Bank will follow
through with last week’s statement which hinted at upcoming
policy steps to contain Madrid’s surging borrowing costs.
“The bid to risk is likely to be sustained in coming weeks
on the back of attractive valuations and market anticipation of
policy action out of Europe, China and even the U.S.,” Morgan
Stanley said in a research note.
China is due to release a slew of July data including
industrial production, retail sales and inflation on Thursday.
Traders and investors will be looking for signs of whether its
economy can pick up momentum in the second half of the year.
Asian credit markets firmed, with the spread on the iTraxx
Asia ex-Japan investment-grade index narrowing by 3
basis points.
The euro eased 0.1 percent to $1.2391, having hit a
one-month high of $1.2444 on Monday.
The Australian dollar traded at $1.0561, holding
near its 4-1/2 month high of $1.0594 touched on Monday, as
investors awaited the outcome of the Reserve Bank of Australia’s
(RBA) policy meeting, with expectations for a steady rate at 3.5
percent following cuts in May and June.
“Trends are slowly forming as risks to reward ratios see
steady improvements in an ultra low volatility environment,”
said Sebastian Galy, strategist at Societe General, noting that
authorities in solid economies may be increasingly wary of an
improving risk environment leading to a rapid appreciation of
their currency.
“Australia is a typical example of this … It means that
they will be more reluctant than they used to, to see their
currency shoot through the roof. The RBA is widely expected to
be on hold at its upcoming meeting given better economic data,
nonetheless the tone is to be watched,” he said.
Possibly reflecting a gradual increase in confidence for
Europe to deal with its debt crisis, Morgan Stanley’s filing
showed on Monday its net exposure to five troubled euro zone
nations – Greece, Ireland, Italy, Portugal and Spain – spiked
73 percent in the second quarter.
Morgan Stanley reduced hedges against the risk that those
exposures might turn into losses. At the same time it
significantly cut its exposure to France, flipping to a net
short position against French sovereign bonds.
This comes after Europe agreed to a broad framework to shore
up the region’s troubled banks in late June.
(Editing by Michael Perry)
