Asia, Europe shares gain on Fed, techs firm

Wednesday, 13 October 2010 21:49 -     - {{hitsCtrl.values.hits}}

SINGAPORE, (Reuters) - Asian and European shares rose on Wednesday on increasing expectations that the U.S.

Federal Reserve will ease policy to support the economy and following an upbeat fourth-quarter forecast from computer chipmaker Intel.

The dollar remained broadly weak after details of the last meeting of the U.S. Federal Reserve suggested the central bank was closer to injecting fresh stimulus into the ailing economy.

 Comments by Japan on South Korea’s leadership of the forthcoming G20 forum underlined growing currency tensions globally. Finance Minister Yoshihiko Noda questioned Seoul’s regular currency market interventions.

Intel, the world’s largest chipmaker, raised expectations for higher technology earnings in the fourth quarter by forecasting stronger sales and margins for the period.

The outlook was part of its third-quarter earnings reported after Wall Street closed, and the stock climbed 1 percent in after-hours trade.

“It’s not that Intel’s results and outlook were great, but they were modestly better than the market’s already lowered expectations,” said Lee Min-hee, an analyst at Dongbu Securities in Seoul, where the Korea Composite Stock Price Index (KOSPI) ended up 0.43 percent.

“It is such relief that is lifting technology stocks. The

PC market has been showing signs of improvement since September, and key memory chip prices are expected to stabilise by the end of this year.” The pan-European FTSEurofirst 300 index of top shares rose 0.3 percent. The STOXX Europe 600 Technology index gained 0.7 percent.

However, falls in the banking sector limited European gains. Standard Chartered slipped 4.4 percent after it said it plans to raise 3.3 billion pounds ($5.3 billion) through a rights offering to raise its capital adequacy ratio.

In Asia, shares of Hynix Semiconductor, the world’s No. 2 memory chipmaker, rose 3.54 percent. TSMC, the world’s biggest contract chipmaker, rose 0.9 percent.

The tech optimism also surfaced in India with No. 2 outsourcers Infosys climbing 1.3 percent on expectations of strong earnings results due Friday.

Tata Consultancy Services and Wipro, the No. 1 and No. 3 software services exporters, were up 1.9 and 1.3 percent respectively.

 “IT spend at Indian techs top clients is on the rise even as rising deal pipelines, acceleration in discretionary spend and increasing deal sizes indicates greater confidence at client end,” brokerage CLSA said in a note this week.

“Infosys and TCS remain our preferred picks to play this  top-line upswing,” it said.

 Expectations that the U.S. Fed is poised to revive the country’s faltering recovery has spurred something of a worldwide equity rally. The Fed next meets to review policy on Nov 2-3.

U.S. stocks hit a five-month high on Tuesday. The S&P 500 index is up 11.3 percent since the start of September, and last month’s performance was one of the best for stocks in a decade.

MSCI’s all-country world equity index has posted a 12.1 percent gain since the beginning of September. The index was up 0.5 percent.

MSCI’s Asia ex-Japan index rose 0.9 percent.

Hong Kong’s Hang Seng index was up 0.31 percent while  Tokyo’s Nikkei closed 0.2 percent higher.

 Still, the Nikkei was capped by concerns over the yen’s strength. The dollar rose 0.1 percent to 81.87 yen, but was not far away from a 15-year low of 81.37 struck on Monday.

Record low interest rates and weak growth in wealthy countries have pushed global investors into higher-yielding emerging markets, driving up their currencies and asset markets.

Several governments, nervous of the damage this could bring, have intervened in markets or tried to contain capital flows, giving rise to concerns that uncoordinated action could stunt global economic recovery.

Japan intervened in the currency market last month for the first time in more than six years to try to stem a rise in the yen that threatens a fragile economic recovery.

 “The market is watching for possible Japanese intervention.

But as long as the yen stays strong, the Nikkei will stay under pressure,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

The euro pushed higher, spurred by Fed minutes of its Sept. 21 meeting that showed central bankers thought the economy might need further support.

The euro was changing hands at $1.3965 on Wednesday, up from a low on Tuesday around $1.3771.

Gold strengthened on the back of the dollar’s weakness and is seen to be consolidating after a record-breaking rally took it to an all-time high of $1,364.6 an ounce last week.

“The markets are buying on a dip, and pushing things higher,” said Mark Pervan, senior commodities analyst at ANZ.

“$1,400 is probably on the radar for the next two to three months. No problem.” Spot gold rose 0.4 percent to $1,355.45 by 0615 GMT, regaining ground lost in the previous session.