Asian markets gain on ECB assurances

Tokyo: Asian shares rose and the euro kept most of its overnight gains on Friday as investor risk aversion eased after the European Central Bank said it was ready to buy bonds of troubled eurozone countries, while markets awaited a key US jobs report.

The MSCI index of Asia-Pacific shares outside Japan edged up 0.3 percent. Australian shares were up 0.2 percent, after posting their strongest finish since August 1, 2011. South Korean shares rose 0.7 percent, pulled higher by shares of Samsung Electronics Co , which jumped after reporting a record quarterly profit.

Tokyo’s Nikkei stock average opened up 0.3 percent.

Chinese markets are closed this week for public holidays.

European shares closed fractionally lower on Thursday as a gloomy economic outlook dented sentiment, but US stocks gained after data showed the number of Americans filing new jobless claims rose only slightly after a big drop the prior week.

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Closely watched monthly US payrolls data due at 1230 GMT is forecast to show a rise of 113,000 jobs in September but a tick up in the jobless rate to 8.2 percent from 8.1 percent in August.

The US Federal Reserve launched aggressive stimulus moves last month aimed at improving the US labour market, which is key to ensuring that the world’s largest economy remains on solid footing amid mounting concerns about slowdowns in Europe and China.

A strong employment report might send stocks towards and even beyond recent peaks and create a headwind for bonds, said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York, in a note. But he added that with the Fed far from changing its accommodative policy, a solid reading is likely to create a buying opportunity for fixed income.

Delays in Spain

The euro steadied at $1.3017, not far from a two-week high of $1.3032 hit on Thursday and inching towards a 4-1/2 month high of $1.31729 seen in mid-September.

Markets gained after ECB President Mario Draghi said on Thursday that the bank has a “fully effective backstop mechanism in place” to buy the bonds of troubled euro zone states such as Spain when they request aid, and that conditions linked to it need not be punitive. The ECB kept a benchmark interest rate steady at a record low 0.75 percent.

Receding risk aversion helped to steady the Australian dollar around $1.0240, off a one-month low of $1.0182 touched on Thursday. The yen, perceived as a safe-haven asset, eased 0.1 percent to 78.52 yen per dollar, near a two-week low of 78.72 hit on Thursday.

Currency markets were unlikely to react much to the Bank of Japan’s policy decision. While the BOJ faces intense political pressures to take bold action to bolster the domestic economy, it is expected to keep monetary policy unchanged on Friday, preferring to hold its fire for now as it reviews the effects of stimulus announced last month.

Spain remains a risk factor for markets as it delays an expected request for a bailout.

“Recent good news has been offset by Spanish delays to request help,” Barclays Capital said in research note.

“We think they will request assistance before the EU summit on October 18-19 and, hence, believe investors will have no reason to avoid buying risky assets then. But the risks of delays are not small, despite Draghi’s latest statements.”

Since the ECB unveiled the bond-buying scheme in September, Spanish borrowing costs have stabilised below critical levels seen as unsustainable.

Spain sold 4 billion euros on Thursday in auctions of bonds maturing in 2014, 2015 and 2017, and the smooth sales saw yields ease from the previous offering.

European sources said the euro zone is considering aiding Spain by providing insurance for investors who buy government bonds, aiming to maintain Spanish access to capital markets and minimise the cost to European taxpayers.

US crude futures were down 0.3 percent at $91.46 a barrel while Brent was down 0.3 percent at $112.24 a barrel early on Friday.

Oil prices jumped 4 percent on Thursday on supply fears as

Turkey’s retaliatory strikes on Syria heightened tensions in the Middle East, while US gasoline futures rallied following a fire at the largest operating refinery in the United States.

Reuters