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Asia: Shares set to extend US rally as copper rises; kiwi gains

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[WELLINGTON] The global stock rally looked set to continue in Asia, with index futures from Japan to Australia signaling gains following a recovery in commodity prices.

Oil held above US$44 a barrel and copper futures climbed, while New Zealand's dollar rebounded from a six-week low.

Futures on Japan's Nikkei 225 Stock Average rose in Osaka and Chicago, with contracts on indexes in Sydney, Seoul and Hong Kong foreshadowing gains of at least 0.1 per cent after US stocks surged the most in two months.

US crude maintained its rebound from a two-week low amid prospects of a disruption in African oil supplies, while copper futures rose for the first time in eight days. As the yen nursed its worst two-day drop since January, the kiwi jumped after the central bank reiterated concern over New Zealand's heated housing market.

Evidence of firming inflation in China ignited gains in industrial metals Tuesday, fueling a 2 per cent climb in Bloomberg's Commodity Index along with the gains in crude oil.

The equity-market bounce follows a selloff last week that erased more than US$1 trillion of value amid evidence of lackluster growth in the world's biggest economies. Concern over the global outlook has called into question the effectiveness of central-bank stimulus, with Japan's finance minister having to bring out the threat of currency-market intervention to arrest gains in the yen, despite efforts this year to boost stimulus.

"Better risk sentiment was apparent overnight, led by oil which in turn buoyed equity bourses," Cameron Bagrie, chief economist in Wellington at ANZ Bank New Zealand Ltd, said in a note to clients.

"However, the failure of fixed-income markets and gold to respond shows a lack of real conviction on some levels. And there are some real reasons for conviction to be light. Yellen et al may have saved the day for now, but how do earnings push higher amidst sluggish global demand?"

South Korea updates its jobless rate Wednesday, while Japan posts on reserves as companies including Toyota Motor Corp and Bridgestone Corp report earnings.

The governor of the Reserve Bank of New Zealand will speak on the state of the economy, and Australia issues data on investment lending and home loans. Economists expect Thailand to keep benchmark interest rates on hold in a policy review.

Stocks

New Zealand's S&P/NZX 50 Index, the first major equity gauge to start trading each day, added 0.2 per cent as of 7:42 am Tokyo time, rising for a second day. Futures on the S&P 500 Index dropped 0.1 per cent following a 1.3 per cent jump in the US benchmark, which was led by gains in energy and mining companies.

Futures on Australia's S&P/ASX 200 Index climbed 0.6 per cent in most recent trading, while those on the Kospi index in South Korea were up 0.3 per cent. In Hong Kong, Hang Seng Index futures gained 0.1 per cent as contracts on the Hang Seng China Enterprises Index advanced 0.3 per cent. FTSE China A50 Index futures added 0.1 per cent.

In Japan, Nikkei 225 futures jumped 1.2 per cent to 16,770 as of 3 am in Osaka, while yen-denominated contracts on the gauge traded in Chicago rose 0.1 per cent in early Wednesday trade, after soaring 3.1 per cent in the previous session. The yen was little changed at 109.30 per US dollar following a two-day slide of more than 2 per cent.

BLOOMBERG