Asian stock rally sputters, oil down as Kuwait strike ends; STI down 0.6%

HONG KONG (AFP) - Asian shares moved cautiously in choppy trade on Wednesday (April 20), struggling to extend the previous day's surge although oil prices turned lower in response to news a strike in key producer Kuwait had been wound up.

Dealers took their lead from another rally in US and European bourses, where tepid corporate earnings results were broadly overlooked in favour of upbeat German data and gains in oil prices.

However, crude retreated on Wednesday after it emerged that the three-day industrial action in Kuwait, which hammered output in the producer major, had been called off as union leaders look to negotiate a pay deal.

The walkout had provided some much-needed support to the commodity on world markets after the collapse at the weekend of talks between Opec and non-Opec giants aimed at limiting production.

"The size of the disruption, had the strike persisted, would have been quite significant," Ric Spooner, a chief market analyst at CMC Markets in Sydney, said. "It took quite a lot of oil out of production."

In morning trade, West Texas Intermediate was down two per cent and Brent lost 1.5 per cent.

Equity markets moved in and out of positive territory in Asia through the morning, with profit-taking offsetting newfound optimism over the world economy.

A second forecast-beating reading on German investor confidence Tuesday was the latest batch of good news, after a string of positive Chinese data this month and indications from the Federal Reserve it will not raise interest rates before June.

Speculation that Japan's central bank will unveil fresh stimulus following last week's double earthquake has also lent support.

Tokyo's Nikkei ended the morning 0.6 per cent higher, while Sydney added 0.3 per cent and Seoul 0.2 per cent. However, Hong Kong was 0.5 per cent off and Shanghai slipped 0.3 per cent.

Singpore's Straits Times Index was down 0.62 per cet at 2,933.53 as of 1:34 pm.

"The Fed will likely delay raising rates amid signs of weakness in the US economy," Angus Nicholson, a markets analyst at IG Ltd. in Melbourne, told Bloomberg News. "The weaker dollar is positive for commodities and equities. There's a real fundamental basis for the rally."

The greenback has managed to hold on to this week's gains above 109 yen, having tumbled Monday below 108 yen in the panic that followed Sunday's Doha oil talks failure.

However, with an increase in demand for higher-risk investments, the US dollar dipped against most emerging market currencies.

The Australian dollar was up 0.1 per cent, the South Korean won added 0.4 per cent, Indonesia's rupiah gained 0.1 per cent and the oil-reliant Malaysian ringgit put on 0.5 per cent.