Asia: Stocks set for mixed start after best gain in three months

[SYDNEY] Asia's stock markets are headed for a muted start to trading Tuesday, as concerns linger that the UK referendum on leaving the European Union will be a close call, countering some of the optimism that drove global equities to their best one-day gain in three months as the week opened.

Futures on Japanese stock gauges fell after the yen climbed Monday, while contracts for Australian and Hong Kong equities were higher. The S&P 500 Index completed its strongest advance in four weeks, though gains faded in the final hour of trading amid speculation the rally had gone too far ahead of Thursday's vote.

The pound retreated after its strongest surge since 2008, as polls published early in the Asian day on Tuesday highlighted that the "Leave" retains strong support.

Global equities have rebounded from a four-week low as riskier assets gained, after bookmakers' odds suggested the chances of a "Leave" vote faded since the murder of a pro- European lawmaker on Thursday. The latest YouGov/Times poll showed "Remain" support at 42 per cent, behind "Leave" at 44 per cent.

That was after a surveyover the weekend showed 45 per cent of voters backed the "Remain" camp, while 42 per cent were in favor of a so-called Brexit. Fed chair Janet Yellen testifies on monetary policy before lawmakers Tuesday and Wednesday in a semiannual report. Traders have cut back their bets an interest- rate hike, pricing in less than even odds for an increase by February 2017.

"The markets have a myopic focus on one thing: the UK referendum vote," said Chris Weston, chief market strategist at IG Ltd in Melbourne.

"All the euphoria of yesterday has seemingly abated and we hit the refresh button. We almost need to take this week one day at a time, such is the nervousness around trading."

Futures on Japan's Nikkei 225 Stock Average were bid down 0.2 per cent to 15,890 in the Osaka pre-market and declined 1 per cent in Singapore, after the underlying index jumped 2.3 per cent Monday.

Nikkei contracts were little changed in Chicago. The yen, which typically moves at odds with Japanese shares, rose 0.1 per cent to 103.84, heading for its eighth straight gain, the longest streak since February 2011.

In Australia, futures on the S&P/ASX 200 Index gained at least 0.5 per cent while those on South Korea's Kospi index were down 0.1 per cent in most recent trading. Contracts on Hong Kong's Hang Seng and Hang Seng China Enterprises gauges pointed to gains of at least 0.8 per cent.

New Zealand's S&P/NZX 50 Index was little changed as of 8:50 am Tokyo time. Futures on the S&P 500 Index added 0.2 per cent to 2,078.75 following the benchmark's 0.6 per cent climb last session.

The MSCI All-Country World Index advanced 1.9 per cent Monday for its biggest increase since March 11.

BLOOMBERG