TOKYO (REUTERS) - Asian stocks rallied on Thursday (Feb 18) and safe-haven government bond prices fell as crude oil prices extended gains on hopes that big producers will cap production, improving investors' appetite for riskier assets.
Crude remained the main market driver, with oil prices up as much as 3 per cent in early Asian trade following a 7 per cent jump on Wednesday after Iran voiced support for a Russia-Saudi-led move to freeze production to deal with the market glut that had pushed prices to 12-year lows.
US crude futures jumped US$1.06 shortly after Asian markets opened, and were up 57 cents at US$31.23 a barrel as of 0818 GMT.
Japan's Nikkei jumped 2.5 per cent, shrugging off bigger-than-expected declines in exports and imports in January.
China stocks were also firmer, as investors expect Beijing to unveil fresh stimulus to support the slowing economy. China's blue-chip CSI300 index rose 0.5 per cent while the Shanghai Composite Index gained 0.4 per cent.
The Hang Seng index in Hong Kong was up 2.6 per cent while the Hang Seng China Enterprises Index jumped over 3 per cent. An index tracking energy shares surged roughly 5 per cent.
Singapore's Straits Times Index was up 1.72 per cent at 2,658.81 as of 10:02 am.
Australian shares climbed 1.9 per cent and South Korea's KOSPI added 1 per cent.
"While there has been some confusion as to whether 'support'equals action, oil traders are simply relieved that the world's fourth largest holder of oil reserves is willing to cooperate," wrote Kathy Lien, managing director of forex strategy at BK Asset Management.
Sentiment was also buoyed by a rise on Wall Street, where US shares advanced for the third straight day as the jump in oil prices boosted energy shares. The Dow gained 1.6 per cent and the S&P 500 rose 1.7 per cent.
Shares also rallied in Europe overnight, where the pan-European FTSEurofirst 300 surged 2.7 per cent.
In currencies, the Canadian dollar held at two-week highs, having benefited hugely from the bounce in oil, while an absence of fresh cues in minutes of the Federal Reserve's January meeting saw the greenback shuffle in narrow range.
The Canadian dollar last traded at C$1.3677 per dollar , having risen as far as C$1.3666 - a high last seen on Feb. 4.
The Australian dollar, another commodity-linked currency, was little changed at US$0.7177 after gaining 1 per cent overnight.
The US dollar inched up 0.2 per cent to 114.29 yen. The euro was flat at $1.1123.
Minutes of the Fed's January policy meeting showed that policymakers worried about tighter global financial conditions hitting the US economy and considered changing their planned path of interest rate hikes in 2016.
"The cautious tone from the January FOMC meeting minutes highlight that the downside risks to the US growth outlook had increased," said Elias Haddad, currency strategist at Commonwealth Bank. "We still expect the Fed to resume raising rates in June, which will continue to bode well for the USD."