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Shanghai leads Asia markets, euro at near nine-year low

Shanghai shares began the new year the same way they ended 2014, surging almost 4 per cent on Monday, while the euro touched an almost nine-year low against the dollar on expectations of fresh European Central Bank stimulus.

[HONG KONG] Shanghai shares began the new year the same way they ended 2014, surging almost 4 per cent on Monday, while the euro touched an almost nine-year low against the dollar on expectations of fresh European Central Bank stimulus.

Oil prices extended losses to sit at five-and-a-half-year lows due to signs of further weakening in the eurozone economy, with both contracts falling towards US$50 a barrel.

Shanghai surged 3.58 per cent, or 115.84 points, to 3,350.52 in its first trading day of the year, its highest since August 2009, after tacking on more than 50 per cent in 2014.

Tokyo eased 0.24 per cent, or 42.06 points to end at 17,408.71, Seoul closed 0.55 per cent lower, or 10.69 points, at 1,915.75, and Sydney added 0.26 per cent, or 14.4 points, to 5,450.3.

Hong Kong slipped 0.57 per cent, or 136.50 points, to 23,721.32.

Chinese investors continue to pour into the market on expectations the government will announce fresh measures to kickstart the economy after more disappointing manufacturing data last week.

"The bull market is continuing with funds rotating to big developers and transport companies," Wei Wei, an analyst at West China Securities Co, told Bloomberg News.

"Liquidity is still good and funds are looking for bargains in the large-cap sector." While there are few catalysts to drive business this week, eyes will be on the release on Wednesday of minutes from the US Federal Reserve's most recent policy meeting, while closely watched jobs data comes on Friday.

Traders already broadly agree that the Federal Reserve will raise interest rates around the middle of the year, and another strong batch of employment figures will reinforce that view.

The greenback, which was already pushing up against the euro, climbed further Monday after the head of the European Central Bank reiterated the possibility of more monetary easing to kickstart the eurozone.

In an interview with German business daily Handelsblatt at the end of last week, ECB President Mario Draghi said deflation was a threat and the central bank must be prepared to counter it.

But the risk that the central bank will not be able to move inflation higher "has increased compared to six months ago", he said.

As a result, the ECB "is currently technically preparing to adjust the size, speed and composition of our measures at the start of 2015, should it become necessary", he added.

The comments sent the single currency tumbling to as low as $1.1865 early Monday, the lowest since March 2006, before rebounding to $1.1958. That compares with $1.2002 in New York Friday and well down from 1.2097 on the last day of 2014.

It was also at 143.91 yen against 144.58 yen in US trade.

"The reasons to be selling the euro were pretty clear over the weekend: Draghi being a step closer to quantitative easing and deepening concerns about the Greek political situation," Sean Callow, a currency strategist at Westpac Banking Sydney, told Bloomberg.

Adding to downward pressure on the unit is uncertainty in Greece, which holds a general election this month, with concerns that the anti-austerity Syriza party will take control.

Markets fear the party will roll back measures required under the IMF-EU bailout of the country, in turn further weakening the eurozone economy.

In other currency trading the dollar was at 120.34 yen against 120.46 yen in New York Friday.

Oil prices fell further. West Texas Intermediate, the US benchmark, eased 81 cents to US$51.88 while Brent crude for February also fell 81 cents to US$55.61 in afternoon trade.

Gold was at US$1,196.71 an ounce, compared with US$1,182.36 on Friday.

In other markets: - Taipei fell 0.36 per cent, or 33.15 points, to 9,274.11.

Taiwan Semiconductor Manufacturing Co. lost 1.06 per cent to NT$139.5, while Hon Hai Precision Industry was 0.80 per cent lower at NT$87.2.

- Wellington added 0.62 per cent, or 34.32 points, to 5,602.60.

Fletcher Building rose 2.05 per cent to NZ$8.47, Port of Tauranga put on 2.08 per cent to NZ$17.20 and Westpac Banking jumped 1.88 per cent to NZ$35.25.

- Manila added 0.64 per cent, or 46.06 points, to 7,276.63.

Ayala Land closed 0.89 per cent higher at 34 pesos, Universal Robina fell 2.55 per cent to 191 pesos while Metrobank gained 1.2 per cent to 84 pesos.