Asian shares steady in range, stimulus hopes support

TOKYO: Asian shares steadied on Tuesday as investors saw weak
regional and global economic data as raising the prospect for further
stimulus from central banks to underpin growth, while Europe kept hopes
for some progress in tackling its debt crisis.
MSCI's broadest
index of Asia-Pacific shares outside Japan were little changed. The
index fell to a fresh four-week low on Monday before recovering to rise
on global stimulus hopes.
Japan's Nikkei stock average opened up 0.1 percent after hitting a four-week low on Monday.
European
shares inched higher on Monday but in a range, with U.S. markets closed
for the Labour Day holiday. The U.S. will report its Institute for
Supply Management manufacturing data on Tuesday, a key report helping
to gauge the probability of an easing by the Federal Reserve at its
Sept. 12-13 policy meeting.
"Yesterday's pattern is likely to be
repeated today. Traders are watching to see if (ECB President Mario)
Draghi comes out holding a definite card of action," said Chung
Seung-jae, an analyst at Mirae Asset Securities.
Business
surveys from the euro zone to China on Monday underscored a spreading
contraction in manufacturing business around the world in August, as
the damage on the global economy from the euro zone's troubles
deepened. New export orders fell even in such countries as India, where
manufacturers have expanded without a break for over three years.
The
euro zone purchasing managers' index stayed below the 50 mark that
separates growth from contraction for the 13th month in a row, raising
expectations the European Central Bank may cut its main interest rates from record lows on Thursday.
Markets
were already expecting the ECB to at least outline its bond-buying
scheme aimed at containing the borrowing cost in struggling economies
such as Spain. Such prospects have helped cap Spanish 10-year yields
below a critical level of 7 percent.
Draghi told European
lawmakers on Monday the ECB's purchases of short term sovereign bonds
would not breach the European Union's taboo of directly financing euro
zone economies, according to a recording obtained by Reuters.
"The comments were not meant to be public but of course raised market expectations of the ECB meeting on Thursday," Westpac Institutional Bank said in a note.
Separately, German Finance Minister Wolfgang Schaeuble
said on Monday he was sure the country's Constitutional Court at its
Sept. 12 ruling would not block treaties establishing a permanent
bailout fund, the European Stability Mechanism (ESM), and strong
budgetary regulations in Europe.
The ESM, meant to succeed the
existing temporary European Financial Stability Facility (EFSF), will
provide a crucial firewall to contain the euro zone debt crisis and the
ECB's bond-buying plan is conditional on the deployment of the ESM.
The euro was capped ahead of the ECB's decision, trading down 0.1 percent at $1.2584 against the dollar.
"While
the white swan from the ECB's announcement of a new bond buying
programme was welcome, we remain concerned that new white swans will be
slower in coming," Societe Generale said in a research note.
"This
is nonetheless what defines the main upside. In China and the US, the
upside is defined by more policy stimulus. Our fear is that such
initially white swans, medium-term would turn to black," it said.
Moody's Investors Service reminded of the risks in Europe.
Moody's
said it changed the outlook of the EU's AAA long-term issuer rating to
negative from stable, citing negative outlooks to the AAA sovereign
ratings of Germany, France, the UK and the Netherlands, which combined
account for about 45 percent of the EU's budget revenue.
The
growth-sensitive Australian dollar traded at $1.0240, near a nine-week
low against the euro and a six-week low against the U.S. dollar, as it
was hit by concerns over slowdowns at home and in its largest export
market, China.
The Reserve Bank of Australia
holds its policy meeting on Tuesday, with economists expecting rates to
remain on hold at 3.5 percent. But Monday's surprisingly weak retail
sales data fuelled speculation the bank may cut rate later in the year.
U.S. crude was up 0.5 percent to $96.97 a barrel while Brent inched up 0.1 percent to $115.83. - Reuters