Asia markets buoyed by ECB easing hopes

An electric quotation board flashing the Nikkei key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on Jan 20, 2015. Asian shares held firm and the euro stayed under pressure on Wednesday as investors counted on the Europe
An electric quotation board flashing the Nikkei key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on Jan 20, 2015. Asian shares held firm and the euro stayed under pressure on Wednesday as investors counted on the European Central Bank to unveil a stimulus drive. -- PHOTO: AFP 

TOKYO (REUTERS) - Asian shares held firm and the euro stayed under pressure on Wednesday as investors counted on the European Central Bank to unveil a stimulus drive, while the yen was subdued ahead of the Bank of Japan's policy announcement later in the Asian day.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent, although Japan's Nikkei slipped 0.4 per cent from a two-week closing high hit on Tuesday after heavy gains in the previous two sessions.

Global share prices have been supported in recent sessions on growing investor conviction that the ECB will adopt quantitative easing at its meeting on Thursday.

The FTSEurofirst 300 index of top European shares climbed to a seven-year high on Tuesday, led by German shares, which hit record highs.

The euro was soft at US$1.1545, having fallen from above US$1.16 touched on Tuesday to get closer to an 11-year trough of US$1.14595 set last week.

But before the ECB's plan is known, the BOJ is expected to maintain its monetary base target while possibly expanding two expiring loan schemes to support bank lending when it concludes its two-day policy meeting on Wednesday.

Still, given BOJ governor Haruhiko Kuroda's history of surprising markets, some traders are playing safe by selling the yen.

"The BOJ could well extend the loan support fund along with downward revision to its core inflation forecast," said analysts at Citi. "It could even expand the loan support fund and extend the duration given the extremely low and flat yield curve, as it does not want to give the impression of standing idle."

The Japanese currency stepped back further from one-month high of 115.85 to the dollar hit last week and last stood at 118.69.

On the other hand, gold held near a five-month high after a 1.3 per cent rise on Tuesday, supported by expectations of ECB money-printing. It last traded at US$1,293.93 per ounce, just below its Tuesday high of US$1,296.85.

Commodity prices remained under pressure, however, falling as much as 5 per cent at one point on Tuesday after the International Monetary Fund cut its 2015 global economic forecast.

Also souring sentiment, key producer Iran hinted prices could drop to US$25 a barrel without supportive OPEC action.

Benchmark Brent crude last traded at US$48.17 a barrel, slipping towards a six-year low of US$45.19 hit last week.