Commodity-related stocks in Asia and the Australian dollar rose for a third straight day Thursday as oil prices extended gains, keeping a rising trend in raw materials prices intact.
U.S. Treasurys edged higher, after the benchmark 10-year yield advanced to 4 percent Wednesday, the highest since Oct 16, on concern about how expensive it will be for the U.S. government to finance its growing budget deficit.
The U.S. dollar fell against the euro ahead of an $11 billion auction of 30-year bonds later. The relationship between oil and the dollar continued to be an inverse one, with tight inventories squeezing crude prices to the highest since late October. Crude oil futures are trading above $72 a barrel, as data showed a slowdown in U.S. crude imports, sending inventories lower. The Australian dollar rose against the greenback, boosted after a report showed national employment fell much less than expected in May. The data was interpreted by the market to mean the Reserve Bank of Australia has fewer reasons to lower interest rates further to support the economy.
Japan's economy shrank a revised 3.8 percent in January-March, confirming a record contraction in the world's No.2 economy, but economists are forecasting a gradual return to growth. Still, weak capital spending and personal consumption will likely be a drag on growth in the coming months as domestic demand crumbles and economic outlook remains highly uncertain.
The Nikkei 225 Average briefly edged above 10,000 to an eight-month high before slipping 0.1 percent on the day, with worries about rising U.S. interest rates offsetting a jump in steel shares on a brokerage upgrade.
South Korea's KOSPI ended 0.3 percent higher after a volatile session, with futures buying on
the day of their expiry boosting markets, while reaction to the central bank's decision to keep the policy rate unchanged was muted.
Australian shares closed 0.6 percent higher, with miners leading gains for a second day amid speculation that many could be in the running to attract Chinese investment.
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Hong Kong shares pared back earlier gains to close flat. Local property stocks were beaten down on worries about rising interest rates, which hit Wall Street shares on Wednesday. Top developer Sun Hung Kai Properties was down 1.9 percent, while Li Ka-shing's property flagship Cheung Kong dropped 2.7 percent. Sino Land slipped 2.5 percent, while Hang Lung Properties gave up 4.8 percent.
Singapore's Straits Times Index dropped 0.4 percent. Singapore Telecommunications edged 0.3 percent lower despite an upgrade from Citigroup on its rating on the stock to "buy" from "hold" and raised the target price, citing improved prospects for earnings.
China's Shanghai Composite Index fell 0.7 percent. Steel shares were weak, with Angang Steel sagging. The official China Securities Journal cited a senior executive at China's steel industry group as saying that China was ready for a breakdown in iron ore term talks with major global miners and was prepared to cut steel output if ore supplies are curbed as a result.