Asian shares conquer 10-year peak, commodities ride high on China

A pedestrian walks past a stock market indicator board in Tokyo. Japan's Nikkei is up 0.5 per cent and South Korea's stock index set a new record with an increase of 0.3 per cent.
A pedestrian walks past a stock market indicator board in Tokyo. Japan's Nikkei is up 0.5 per cent and South Korea's stock index set a new record with an increase of 0.3 per cent.PHOTO: EPA-EFE

SYDNEY (REUTERS) - Asian shares rallied to a decade high on Monday (Oct 16) as upbeat Chinese data boosted commodity prices, while the euro extended losses after the Catalan leader failed to give a clear answer to whether or not he declared independence from Spain.

MSCI's broadest index of Asia-Pacific shares outside Japan gained for a fifth day running to its highest level since late 2007.

Japan's Nikkei climbed for a sixth day, up 0.5 per cent, to a level not seen since November 1996. Australian shares extended their winning streak to a fourth straight session to rise 0.6 per cent, while South Korea's stock index set a new record with a 0.3 per cent rise.

The Singapore market lagged behind with shares up just 0.16 points at 3pm.

European stock futures pointed to a steady start while Dax futures and CAC 40 were a tad firmer.

Commodities also joined the party with copper at a three-year top, underpinned by robust economic data from China, the world's top user of metals.

Figures on Monday showed China's producer prices beat market expectations to rise 6.9 per cent in September from a year earlier.

Prices of iron ore and coke, key ingredients in steel-making, jumped with Dalian iron ore futures, rising 2.5 per cent to a 2½ week high while coke for January delivery gained 1.6 per cent.

News from China could be a key market driver this week, given the Communist Party congress starting on Wednesday and third-quarter economic data.

"When it comes to the Congress, we expect policy consistency," said Catherine Yeung, Investment Director, Fidelity International which has US$397 billion assets under management. "It would be concerning if that wasn't the case."

It wasn't all beer and skittles though, with politics putting a damper on euro bulls. Catalan leader Carles Puigdemont said in a letter to Spanish Prime Minister Mariano Rajoy that the two should meet as soon as possible to open a dialogue over the next two months.

In Austria, young conservative Sebastian Kurz is on track to become the country's next leader after Sunday's election. He is seen as likely to seek a coalition with the resurgent far right because his party is far short of a majority.

The developments threaten to disrupt a move by German Chancellor Angela Merkel and French President Emmanuel Macron to draw up a roadmap to deeper European Union integration.

The euro was poised for a third day of losses. It was last down 0.3 per cent at US$1.1791 as it slipped further from a 2½-week high of US$1.1880 touched on Thursday.

"The euro's dismal price action after Friday's low US inflation data hinted strongly that investors are in no mood to assume the best in euro zone politics," said Sean Callow, Sydney-based senior currency strategist at Westpac Banking Corp.

"There is a lot of interest in whether Spain might be coming apart at the seams and whether Austria will now be a spoiler for any new Merkel-Macron projects."

Merkel herself is no longer in a strong position as she prepares for tricky coalition talks after suffering a defeat at the hands of the Social Democrats in a vote in the northern state of Lower Saxony.

The dollar index, which measures the greenback against a basket of currencies, was a touch firmer at 93.212.

In commodities, US oil futures jumped to and hovered near a six-month high on supply fears after Iraqi forces began moving towards oil fields held by Kurdish Peshmerga fighters near the oil-rich city of Kirkuk.

US crude climbed 0.9 per cent to US$51.92 a barrel, not far from US$52.85 touched late last month - a level not seen since April. Brent crude climbed 1.2 per cent to US$57.88 per barrel.

Gold slipped 0.1 per cent to US$1,302.5.