Asia markets mostly up, euro struggles ahead of ECB meeting

[HONG KONG] Asian equity markets mostly rose Monday following a rally on Wall Street and a strong pick-up in oil prices, but Shanghai plunged almost six percent after Chinese regulators suspended three major brokerages over rule violations.

The euro continued to struggle against the dollar and yen ahead of this week's European Central Bank (ECB) meeting that is expected to see it unveil a vast bond-buying scheme to kickstart the eurozone economy.

Tokyo rose 0.52 per cent, Sydney added 0.90 per cent, Seoul advanced 0.92 per cent and Singapore put on 0.24 per cent.

However, Shanghai dived 5.88 per cent in the first few minutes, while Hong Kong gave up 0.62 per cent.

Regional investors were given a positive lead from New York, where all three main indexes finished the week on a high thanks to a jump in oil prices.

The Dow rose 1.10 per cent, the S&P 500 added 1.34 per cent and the Nasdaq rallied 1.39 per cent.

Crude rallied after the the International Energy Agency said there were signs "the tide will turn" in the market after tumbling towards six-year lows.

While it foresaw prices sliding in the short term, the Paris-based agency said it expected a potential rebalancing of the market in the second half of the year.

The comments sent US benchmark West Texas Intermediate (WTI) for February surging US$2.44 Friday, while Brent for March jumped US$2.50.

However, on Monday the two contracts retreated slightly. WTI eased 50 cents to US$48.19 a barrel and Brent fell 44 cents to US$49.73.

In Shanghai shares plunged after the China Securities Regulatory Commission (CSRC) on Friday suspended three brokerages from opening new margin trading accounts for three months after rule violations were found in an inspection.

The news was a blow for Chinese stocks, which have surged in recent weeks thanks to an interest rate cut in November and driven by liquidity and margin trading - investors using borrowed funds to trade on the markets with only a small portion of money put down as deposit.

The three brokerages - Citic Securities, Haitong Securities and Guotai Junan Securities - are among the country's biggest.

"The CSRC's punishment of the three brokerages for rule violations for margin trading business last Friday was a punch to the market," BOC International analyst Shen Jun told AFP.

Eyes are now on the release Tuesday of economics growth data for 2014, with an AFP survey predicting expansion of 7.3 per cent, down from 7.7 per cent in 2013 and the slowest annual rate since 1990 after the Tiananmen Square crackdown.

On currency markets the euro fetched US$1.1564 and 135.76 yen, against US$1.1566 and 135.87 yen in New York Friday.

The single currency is facing selling pressure ahead of the ECB meeting on Thursday that analysts are forecasting will see the introduction of sovereign bond purchases, known as quantitative easing (QE).

The scheme essentially entails the bank printing euros in order to boost lending and fight off deflation. However with more cash in circulation demand for the single currency weakens and on Friday the unit sank below US$1.1500 for the first time since November 2003.

The dollar changed hands at 117.41 yen in the morning, compared with 117.46 yen in New York Friday.

Gold fetched US$1,277.65 an ounce, against $1,257.60 late Friday.

AFP