Asian shares rallied on Tuesday as a drop in oil prices below $50 a barrel eased pressure on the global economy, while the dollar edged lower as U.S polls showed a dead heat ahead of the presidential election later in the day. Mizuho Financial Group Inc. <8411.T> jumped 4 percent after Japan's biggest bank raised its first-half profit estimate by two-thirds on Monday, helping lift Japanese stocks more than one percent to a two-week high. An MSCI index of Asia Pacific shares outside Japan <.MSCIAPJ> rose as much as 0.9 percent to its highest level in six and a half months, tracking gains on Wall Street. European shares were expected a touch weaker, with Ryanair , Europe's largest low-cost carrier, in focus after it reported a better-than-expected 18 percent rise in first-half net profit. U.S. stock index futures edged higher. U.S. crude slipped 23 cents to $49.90 a barrel amid rising U.S. oil inventories, recovering U.S. Gulf production and speculation that an election victory by Democrat challenger John Kerry could prove bearish for oil prices in the medium-term. The dollar edged down against the yen, but moves were restrained ahead of the U.S. election as national polls showed a virtual dead heat between President George W. Bush and Senator Kerry.
"The general feeling is that the dollar will be sold if Kerry wins, or in the case that we don't get a quick clean result," said Hideaki Furumaya, forex manager at Trust & Custody Services Bank in Tokyo. The biggest risk for investors is a protracted process in deciding the outcome of the election, which would probably put pressure on the dollar and equities. Gold prices eased to around $425 an ounce and Japanese government bonds tracked losses in U.S. Treasuries.
TOYOTA FALLS
Tokyo's Nikkei stock average <.N225> rose 1.4 percent to a two-week closing high of 10,887.81 on optimism over banks' earnings, especially after Goldman Sachs raised its view on big Japanese banks. "Investors who have been looking for clear trading incentives are rushing to banks after Mizuho's earnings revision and the Goldman news," said Kenichi Azuma at Cosmo Securities. Toyota Motor Corp. <7203.T> dropped 1.5 percent a day after the company, the world's second-biggest car maker, posted a surprise drop in quarterly profits. Australian shares <.AXJO> raced to their fifth record close in a row, boosted by a 2.3 percent rise in News Corp. . Shares climbed around 1.2 percent in Hong Kong <.HSI>, led by a 4.2 percent jump in top Chinese oil firm Sinopec Corp. <0386.HK> after it said it would buy profitable petrochemical assets from its parent for 4.58 billion yuan ($553 million).
OIL FALL LIFTS TAIWAN, KOREA
Shares in Taiwan <.TWII> rose 1.8 percent on the fall in oil prices, led by a 2.5 percent rise in contract chip maker Taiwan Semiconductor Manufacturing Co. Ltd. <2330.TW>. AU Optronics <2409.TW>, the world's third-largest computer screen maker, soared 6.3 percent. "Oil prices below $50 gives electronics an opportunity to rebound," said Chiang Chen-shang, research manager at Masterlink Securities Investment Advisory. "Taiwan's electronics have lagged U.S. technologies shares and they need to catch up." South Korean shares <.KS11> climbed 1.3 percent, led by car makers as the drop in oil prices eased concerns over the impact of high energy costs on corporate profits. Asian countries, including Japan and South Korea, import almost all of their oil. The dollar bought around 106.36 yen , down from 106.46 in late U.S. trade. It hit a 6-1/2-month low of 105.77 on Friday. The dollar was at $1.2728 per euro versus $1.2752 in late New York trade. Easing crude prices helped U.S. stocks rise on the eve of the U.S. election, with the Dow Jones industrial average <.DJI> edging up 0.27 percent and the tech-heavy Nasdaq <.IXIC> climbing 0.25 percent. Record high oil prices, which have risen more than 50 percent this year, have increased concern that energy costs will dent household incomes, raise companies' expenses and hamper global economic growth. Oil prices have tumbled 10 percent from their all-time high of $55.67 set just over a week ago. Japanese government bonds fell, with the yield on the benchmark 264th 10-year cash bond <0#JPTSY=JBTC> up 4.5 basis points at 1.545 percent, its highest level since Oct. 9. Spot gold eased to $425.50 an ounce versus $426.75 last quoted in the U.S. market on Monday.////