* MSCI Asia ex-Japan up 0.1 pct to 16-month high
* Nikkei opens flat
* Euro near 1-week low vs dollar
By Chikako Mogi
TOKYO, Dec 7 (Reuters) – Asian shares ticked up to a
16-month high on Friday following modest overnight gains in
global equities as investors watched progress in U.S. budget
talks and awaited U.S. nonfarm payrolls data later in the day.
The euro hovered near a one-week low against the dollar,
having fallen after the European Central Bank painted a bleak
outlook for the euro zone and discussed cutting interest rates
at its policy meeting on Thursday when it kept rates steady.
MSCI’s broadest index of Asia-Pacific shares outside Japan
was up 0.1 percent, pulled up by a 0.7 percent
increase in Australian shares with top miners supported
by rebounding iron ore prices and banks recovering from losses.
South Korean shares opened up 0.2 percent while
Japan’s Nikkei stock average opened little changed.
“The main board is expected to rise on Friday, but gains
will be limited in the absence of game-changing events since the
last session as we await U.S. employment data,” Cho Byung-hyun,
an analyst at Tong Yang Securities, said of Seoul shares.
U.S. stocks advanced modestly while the FTSEurofirst 300
index of top European shares hit an 18-month closing
high on Thursday, with bullish technicals, an improving global
outlook and attractive valuations raising equities’ appeal.
As superstorm Sandy disrupted U.S. economic activity,
nonfarm payrolls in November are expected to have increased only
93,000, compared to October’s 171,000 job gain, a Reuters survey
of economists showed. The unemployment rate is seen holding
steady at 7.9 percent.
“A soft number should reinforce the case for the Fed doves
ahead of next week’s FOMC meeting where QE is likely to be
increased in order to at least offset the expiration of
Operation Twist. Hence a soft report should hurt USD and vice
versa,” Sean Callow, senior currency strategist at Westpac bank
in Sydney, said in a note.
At its Dec. 11-12 meeting, the Federal Reserve is expected
to announce a new round of Treasury bond purchases to reinforce
quantitative easing, replacing the expiring programme called
Operation Twist, under which it bought $45 billion of
longer-dated bonds a month while selling its shorter-date
holdings.
The dollar traded at 82.44 yen, sticking close to a
7-1/2-month high of 82.84 hit on Nov. 22.
With little to show after a month of posturing, the White
House and Republicans in Congress dropped hints on Thursday that
they had resumed low-level private talks on breaking the
stalemate over the “fiscal cliff” but refused to divulge
details.
Markets have been keeping up hope that Washington would
eventually avert some $600 billion of tax hikes and spending
cuts scheduled to start in January. Economists have warned that
failure by Congress to reach an agreement on deficit reduction
could tip the U.S. economy back into recession, further weighing
on the fragile global economy.
The euro steadied at around $1.2962, after falling
nearly 1 percent to $1.2950 on Thursday for its biggest
one-day loss in a month, and retreating from a seven-week peak
of $1.3127 set mid-week.
ECB President Mario Draghi said on Thursday policymakers
held a wide discussion on interest rates, leaving the door open
to a possible cut in borrowing costs next year.
The bank’s new staff projected gross domestic product in a
range of a declining 0.9 percent to growing just 0.3 percent
next year, suggesting contraction is far more likely than not.
It forecast inflation of 1.1 percent to 2.1 percent next year.
U.S. crude futures inched up 0.2 percent to $86.43 a
barrel.
