Asian shares, dollar cheered by upbeat U.S. data

By Lisa Twaronite

TOKYO (Reuters) – Asian stocks started the week on a brighter note on Monday, after solid U.S. data and earnings calmed tumult in global financial markets and reassured investors worried about the health of the world economy.

The Thomson Reuters/University of Michigan index of consumer sentiment was surprisingly strong in early October, rising to more than a seven-year high. Other data also showed new housing starts rose more than expected last month, suggesting U.S. economic growth was solid.

The upbeat U.S. data has brought some calm to markets after a week of turbulence as signs of softening global growth rattled investors, sending volatility spiking to levels not seen in years.

“Sentiment has seemingly been unaffected by the market volatility,” strategists at Barclays said in a note to clients.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up about 0.6 percent in early trade, and Japan’s Nikkei stock average (.N225) surged about 2.6 percent, retaking some of the 5 percent it shed in the previous week.

On Wall Street on Friday, all major stock indexes climbed more than 1 percent, though the S&P 500 (.SPX) posted its fourth straight weekly decline, its longest streak in more than three years.

U.S. earnings will remain in the spotlight this week, with results due from 128 S&P 500 companies, including six Dow components.

Out of the 81 S&P 500 component companies that have already reported third-quarter results, 64.2 percent have beaten expectations, a rate slightly below the average over the past four quarters but better than the past 20 years.

Asian investors will also pay attention to developments in Hong Kong, where pro-democracy protests entered their fourth week and demonstrators appeared increasingly willing to confront police.

U.S. Treasuries posted their second straight day of declines on Friday, and their rising yields added to the dollar’s appeal.

The yield on benchmark 10-year notes stood at 2.198 percent in Asian trade, steady from Friday’s U.S. close of 2.199 percent and well above 17-month lows plumbed last week.

Speculators boosted their bullish bets on the dollar in the week ended Oct. 14 to their largest since late May last year, still showing optimism for U.S. economic prospects, data from the Commodity Futures Trading Commission showed on Friday.

The value of the dollar’s net long position increased to $43.04 billion from $40.91 billion the previous week. Net dollar-long positions notched their fourth straight week of rises, and totaled at least $30 billion for the ninth straight week.

The euro (EUR=) was last down about 0.1 percent at $1.2748, while the dollar added 0.2 percent against the yen (JPY=) to 107.12 yen.

The yen’s drop to a six-year low against the dollar of 110.09 on Oct. 1 followed a rapid decline of 8 percent over three months, and sparked fears at some Japanese companies. Nearly half of Japanese firms think the government should start defending the yen at this month’s dollar high of 110, according to a Reuters survey released on Monday.

In commodities trading, Brent crude (LCOc1) rose about 0.3 percent to $86.44 a barrel, bouncing from last week’s nearly four-year lows as investors bought back into a market they said was oversold. U.S. crude (CLc1) rose about 0.8 percent after logging its third weekly decline.

Spot gold (XAU=) inched down abut 0.1 percent to $1,235.90 an ounce, after marking its second straight weekly gain.

(The story was refiled to fix a typographical error in the first paragraph)

(Editing by Shri Navaratnam)