Asian shares hit fresh four-year highs on Tuesday, with techs such as Samsung Electronics tracking a Wall Street rise as investors looked with optimism to earnings from key U.S. firms such as Intel Corp. The dollar fell slightly against the yen and edged up against the euro, with market players keeping a close eye on events in Iraq and the fate of three Japanese hostages there. Tokyo's Nikkei stock average <.N225> had risen 0.9 percent by midday to a 32-month high of 12,149.36, as banks extended gains on growing optimism over an economic recovery and tech-related shares rose on hopes for good earnings from their U.S. peers. "The general feeling is that they will come in at the higher end of forecasts," said William Dwyer, chief investment officer at MTB Investment Advisors in Baltimore. "This is a very big week for earnings, and if we start off on a good footing, hopefully it will carry through the end of the week." Mizuho Financial Group <8411.T>, Japan's biggest banking group by assets, was up 3.4 percent, while Toshiba Corp <6502.T> rose 3.2 percent.
The rise in Tokyo stocks saw Japanese government bond (JGB) prices fall, sending the five-year yield to a five-month high as caution set in ahead of an auction later in the day. MSCI's broadest index of Asia Pacific shares outside Japan <.MSCIAPJ> rose 0.4 percent to its highest dollar value since early 2000. South Korean shares <.KS11> rose 0.5 percent as market leader Samsung Electronics <005930.KS> climbed 1.8 percent to another record high. Shares in Taiwan <.TWII> were up 0.4 percent and Hong Kong <.HSI> had climbed 1.4 percent shortly after the open. Oil slipped 12 cents to $32.72 a barrel as investors locked in profits from the previous day's jump and focused on weekly oil inventory data, due on Wednesday.
YEN CLIMBS
Helped by the Nikkei's rise to levels not seen since August 2001, the yen was trading around 0.3 percent higher at 105.14 per dollar . While Tokyo traders were still awaiting news on the fate of the Japanese hostages in Iraq, many expected the crisis to have a limited effect on the market. "The market is taking comfort in the fact that some foreign hostages have been freed in Iraq, and there's hope that the outcome for the Japanese hostages will take the same course," said Toshihiro Azuma, a forex manager at Sumitomo Trust and Banking. The euro was hovering around $1.2060 , keeping above the key 1.20 level after slipping against the dollar in New York. In U.S. equities, the Dow <.DJI> closed up 0.70 percent at 10,515.56, while the tech-heavy Nasdaq <.IXIC> rose 0.61 percent to 2,065.48. Investors were anticipating strong quarterly earnings, with the spotlight turning to Intel Corp which is due to report later on Tuesday. Others reporting this week include McDonald's Corp , International Business Machines Corp and Citigroup Inc . Analysts say they will have to post strong results to justify hefty gains in stock prices in the past year, but tensions in Iraq could eclipse any upbeat news on the corporate front. In Japan, the yield on the 35th five-year bond <0#JPTSY=JBTC> rose 2.5 basis points to 0.705 percent, its highest level since November 11, while the yield on the benchmark 10-year JGB rose two basis points to a five-month high of 1.545 percent <0#JPTSY=JBTC>.
Spot gold was trading at $420.75/421.50 an ounce versus $419.50/420.00 in New York.///