Asian stocks steady, euro pressured by French election worries

Pedestrians walking in front of an electric quotation board flashing the Nikkei key index of the Tokyo Stock Exchange in Tokyo, on Feb 10, 2017.
Pedestrians walking in front of an electric quotation board flashing the Nikkei key index of the Tokyo Stock Exchange in Tokyo, on Feb 10, 2017.PHOTO: AFP

HONG KONG (REUTERS) - Asian stocks held near 1-1/2-year highs in subdued early trade on Tuesday (Feb 21) as a holiday in the United States left investors with few catalysts, while the euro nursed overnight losses as lingering concerns about the looming French election rattled its bonds.

Political concerns have been at the front and center of investors' minds over the past week or so, with markets wary about the outcome of the French elections in the wake of Brexit.

The premium investors demand to hold French bonds instead of German debt rose to its highest since late 2012 after a poll showed the far-right Marine Le Pen narrowing the gap with more centrist opponents.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat in opening trades on Tuesday and held below a 19-month peak hit last Thursday. The index is up more than 11 per cent since Dec 23.

Australian stocks were down with investors watching first half results from the world's biggest miner by market value, BHP Billiton later in the day. The company has been struggling to find a way forward after a 12-day strike at its Chilean copper mine Escondida.

In currency markets, the euro eased to US$1.06090, having moved little on Monday, due partly to the absence of US investors because of a holiday. It has fallen 1.75 per cent so far this month.

Against the yen, the euro traded at 120.15 yen, off from lows of 119.65 yen on Monday.

The latest French poll overshadowed optimism that Greece may avert another crisis after a government official said the country had agreed with euro zone finance ministers to resume no resume negotiations over its bailout review.

Fears that cooperation on the left could lead to a run-off between Socialist candidate Benoit Hamon or hard-left candidate Jean-Luc Melenchon and Le Pen, eliminating three main moderate candidates, have dogged the euro since Friday when the two leftists said they were discussing such cooperation.

In a morning note, ANZ strategists noted that widening European bond spreads represented a tightening in financial conditions at a time when the European central bank is low on fire-power.

Oil prices were broadly steady after having suffered the first weekly decline in five weeks as the market weighed rising US drilling and record stockpiles against efforts by major producers to cut output to reduce a global glut.

Brent futures were steady at US$56.18 a barrel, while US West Texas Intermediate crude for April delivery added 0.4 per cent to US$53.60 a barrel.