Asian stocks gain as oil price rises after Opec agrees to cut crude production

The Opec logo is pictured ahead of an informal meeting between Opec members in Algiers, Algeria on Sept 28, 2016.
The Opec logo is pictured ahead of an informal meeting between Opec members in Algiers, Algeria on Sept 28, 2016. PHOTO: REUTERS

TOKYO (Reuters) - Asian stocks gained on Thursday in tandem with an oil price rally after Opec members agreed to curb output - boosting investor risk appetite.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6 per cent.

Commodity-heavy Australian shares advanced 0.6 per cent and South Korea's Kospi gained 0.7 per cent. Japan's Nikkei rose 0.9 per cent after losing 1.3 per cent the previous day.

Overnight, European shares gained on a recovery in battered Deutsche Bank shares while the Dow rose 0.6 per cent and the energy index had its best day since January in light of the Opec agreement.

Oil prices settled up nearly 6 percent on Wednesday after Opec struck a deal to limit crude output, seen as a surprise by the market, at its policy meeting in November. It was Opec's first agreement to cut production since 2008. "With profits being squeezed the battle for market share can't go on and this deal ushers in a new period of cooperation between Opec nations and specifically between Saudi Arabia and Iran," wrote Kathy Lien, managing director of FX strategy for BK Asset Management. "While we wouldn't be surprised by some back-pedalling between now and November, this is a historic moment and one that should have a lasting impact on the Canadian dollar." The Canadian dollar, which was already on the front foot against its U.S. peer earlier this week thanks to a perceived U.S. presidential debate win by Democrat Hillary Clinton over Republican Donald Trump, soared even further.

A potential win by Trump, who has criticised trade agreements, has been a source of concern for U.S. neighbours Canada and Mexico.

The Canadian dollar traded at C$1.3051 to the dollar after gaining nearly a percent overnight. The loonie had seen a six-month low of C$1.3281 early on Tuesday amid jitters towards the U.S. presidential debate.

Other commodity-linked currencies also fared well as oil rallied, with the Norwegian crown touching a five-month high against the dollar on Wednesday. The Australian dollar hit a three-week high of US$0.7696 early on Thursday.

The euro inched up 0.1 per cent to US$1.1223, while the dollar climbed 0.3 percent to 100.950 against the safe-haven yen as broader risk sentiment improved.

Brent crude was up 0.4 per cent at US$48.87 a barrel, adding to overnight gains of 5.9 percent. U.S. crude added 0.5 per cent to US$47.28 a barrel after rising 5.3 per cent on Wednesday, when it hit its highest since Sept. 9.