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Asia: Stocks rally after sharp losses, yen retreats

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[HONG KONG] Asian stocks rose Friday after the previous day's sell-off and a rebound on Wall Street, while the killing of a lawmaker forced a suspension of campaigning for Britain's EU vote, which analysts said could benefit the "remain" camp.

Markets plunged Thursday as investors grow increasingly concerned that one of the European Union's big three economies will break away after next week's poll, which many warn could precipitate a global rout.

Japan's refusal to ramp up its stimulus in the face of torpid growth at home also dragged on sentiment.

But after five straight days of losses, New York's three main indexes saw modest gains, which provided some incentive for Asian investors.

Tokyo was up 1.1 per cent, having plunged more than three per cent Thursday, while Hong Kong was 0.4 per cent higher in the afternoon and Shanghai ended 0.4 per cent up.

Sydney added 0.3 per cent, Seoul put on 0.1 per cent and Taipei and Manila also piled healthy gains.

Canvassing for the British in-out referendum on the EU was cancelled until the weekend after pro-remain Labour MP Jo Cox was shot and stabbed to death on Thursday.

The Guardian newspaper reported a witness as saying the attacker had shouted "Britain First", which is the name of a far-right anti-immigration and anti-EU group.

"It's evident that the rally is being entirely attributed to the belief that yesterday's tragedy has increased the likelihood of the 'Remain' side holding sway in next week's referendum," Ray Attrill, co-head of currency strategy at National Australia Bank in Sydney, said.

The British pound edged up to US$1.4230 from US$1.4211, having surged earlier to US$1.4266 as the odds that Britain will vote to stay in the EU increased.

Karl Schamotta, director of foreign-exchange research and strategy in Toronto at Cambridge Global Payments, said the uncertainty in markets would likely benefit those wanting to stay in the EU.

"If you do see uncertainty, that typically will drive voters to the status quo," he told Bloomberg News.

"We're seeing a trade that's entirely too crowded - at the end of the day, the market expectation remains that we will see a stay vote."

The yen - considered a safe bet in times of turmoil - retreated from Thursday's near 22-month high against the US dollar, which it touched soon after the Bank of Japan's decision to stand pat on stimulus.

The US dollar climbed to 104.40 yen from 104.29 yen, after falling as low as 103.56 yen in the previous session.

Gold, another safe haven asset, also slipped 1.6 per cent to US$1,283, a day after hitting US$1,300, while oil prices turned upwards after a six-day losing streak caused by the general sell-off of risk assets and worries about increasing supplies.

US benchmark West Texas Intermediate rose 0.8 per cent to US$46.58 and Brent gained 1.2 per cent to US$47.77.

By the close of trade Thursday WTI had plunged 10 per cent from last week's 11-month high, while Brent had given up 9 per cent.

AFP