* MSCI Asia ex-Japan up 0.2 pct, Nikkei opens up 0.2 pct
* Yen stays pressured ahead of this week’s BOJ meeting
By Chikako Mogi
TOKYO, Dec 18 (Reuters) – Asian shares crept higher on
Tuesday, tracking the overnight gains in U.S. stocks on optimism
for progress in resolving the U.S. budget crisis before the
year-end deadline.
Expectations of more monetary easing kept the yen soft.
MSCI’s broadest index of Asia-Pacific shares outside Japan
was up 0.2 percent, after ending an eight-day
winning streak on Monday as investors took profits from last
week’s rally.
Australian shares rose 0.6 percent, lifted by a rise
in iron ore prices to a five-month high and by gains on Wall
Street. South Korean shares opened up 0.4 percent.
Global shares advanced on Monday, supported by signs of
tentative progress on negotiations to avert the U.S. “fiscal
cliff” of tax hikes and spending cuts due to set in at the start
of next year.
While the fiscal cliff remains a major focus for markets,
prices may become unlikely to rise with players taking profits
to close their books before leaving for the holidays, traders
said.
U.S. President Barack Obama and top Republican John Boehner
met at the White House on Monday, with simple evidence of
ongoing communication keeping alive hopes that Washington will
be able to resolve the budget crisis.
“There was no meaningful breakthrough in the negotiations,
but the high-level meetings do improve investor sentiment,” said
Kim Soon-young, an analyst at IBK Securities.
The dollar steadied around 83.91 yen, off a 20-month
high of 84.48 yen hit on Monday but well above its late New York
levels on Friday.
The yen slumped broadly on Monday after the Liberal
Democratic Party of Japan’s election triumph opened the way for
a cabinet headed by LDP leader Shinzo Abe, who is calling for
far more aggressive monetary stimulus and huge public works
spending to rescue Japan out of decades-long deflation.
Abe, who is due to be confirmed as Japan’s next premier on
Dec. 26, applied fresh pressure on the Bank of Japan on Monday,
saying that the election result reflected strong public support
for his views, which he hoped the BOJ would take into account at
its two-day policy meeting starting on Wednesday.
“The dollar has more upside against the yen ahead of the
BOJ’s meeting, with expectations for some additional easing
steps being strengthened after Abe’s comments yesterday,” said
Yuji Saito, director of foreign exchange at Credit Agricole in
Tokyo.
“The corrective fall in the dollar/yen after the election
was small and it’s crawling up because the yen weakening trend
is still intact. But after the BOJ meeting, there will likely be
pre-holiday profit-taking, pushing the dollar/yen down by 1-2
yen,” he said.
By putting pressure on the yen, Abe’s election win was also
seen as supportive for Japanese stocks as a weak yen improves
prospects for Japanese corporate export earnings.
After closing Monday at a 8-1/2-month peak on the yen’s
slide, Japan’s Nikkei stock average was likely to pause
for now. The Nikkei opened 0.2 percent higher.
“The so-called Abe trade is likely to be over. I think the
market will see some sell-off but will be supported by dip
buying,” said Takashi Hiroki, chief strategist at Monex Inc.
U.S. crude rose 0.3 percent to $87.44 a barrel.
