TOKYO (REUTERS) - Asian stocks held firm on Wednesday (Oct 7) as a sharp rebound in oil prices supported battered resource shares and emerging economy currencies, while Japanese markets were tentative ahead of a crucial Bank of Japan policy meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.2 per cent, led by a 0.4 per cent rise in South Korea. Japan's Nikkei was almost flat ahead of the Bank of Japan policy announcement later in the morning.
The Straits Times Index was trading down 0.34 per cent at 2,887.64 as of 9:04 am.
Although a string of weak Japanese economic data has raised speculation of fresh stimulus from the BOJ, most market players believe governor Haruhiko Kuroda would prefer to sit tight for now.
"I do not expect a policy change nor comments to hint at future easing at Kuroda's news conference. Rising expectations that the Fed will hold off raising rates could have a similar impact (on markets) as any easings. It seems wiser to benefit from that now," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
Data on Friday showing a surprisingly soft reading on US jobs led many investors to scale back their expectations that the Federal Reserve would raise interest rates this year.
That in turn has supported riskier assets which had come under pressure partly on worries the Fed would tighten policy at a time of cooling growth in China and globally.
The biggest mover overnight was oil prices, which jumped to one-month highs after breaking above key resistances, supported by news that non-OPEC producer Russia and key OPEC member Saudi Arabia discussed the oil market last week.
The two countries plan to continue exchanging views on the oil market, Russian Energy Minister Alexander Novak told reporters.
That raised expectations the world's two largest oil exporting countries may take measures to support prices, even though analysts have warned that their different positions on Syrian President Bashar al-Assad's future may hamper cooperation.
Brent, the global benchmark for crude, rose 5.4 per cent on Tuesday to US$51.92 per barrel.
That underpinned commodity currencies and emerging market assets that have been rocked by concerns of slower growth in China.
The Brazilian real rose to its highest level in almost three weeks, also helped by hopes that President Dilma Rousseff's efforts to strengthen her political coalition through a cabinet reshuffle will pay off.
The Australian dollar hit a two-week high of US$0.7176 on Tuesday and last stood at US$0.7159.
The US dollar was soft against major currencies as expectations of a Fed rate hike before year-end ebbed.
The dollar's index against six major currencies stood at 95.456, just above its low of 95.218 touched on Friday.
The euro traded at US$1.1274, near this week's high of US$1.12895.
The yen moved little at 120.26 to the dollar ahead of the BOJ's meeting.