Asian stocks near 2-week highs as oil tries to rally, STI up 0.5%

SYDNEY (REUTERS) - Asia shares pushed ahead on Wednesday (Dec 23) following a rally on Wall Street, while major currencies entered a holiday lull and oil strove to sustain a modest bounce from multi-year lows.

MSCI's broadest index of Asia-Pacific shares outside Japan firmed 0.6 per cent to the highest in almost two weeks. Australia's main index rose 0.5 per cent, while South Korea added 0.3 per cent.

Singapore's Straits Times Index was up 0.49 per cent at 2,867.09 at 2:06 pm.

For European markets, IG tipped an opening gain of 51 points for Britain's FTSE 100, 83 points for Germany's DAX and 35 points for France's CAC 40.

Already shallow liquidity was drained further by the absence of Tokyo for the Emperor's Birthday, while on Thursday a host of markets globally will be either shut or closing early.

The data cupboard was also bare for Asia, leaving investors waiting on a hefty helping of US figures covering personal incomes and spending, inflation and durable goods orders.

Some of that came early as the Bureau of Economic Analysis inadvertently released figures on US personal consumption. As it was, the monthly increase of 0.3 per cent was in line with forecasts and had no obvious impact on markets in Asia.

Equity investors were encouraged by a second session of gains for Wall Street. The Dow ended Tuesday up almost 1 per cent, while the S&P 500 rose 0.88 per cent and the Nasdaq 0.65 per cent.

Economic data showed a slight downward revision in US economic growth to an annualised 2.0 per cent, but that still pipped forecasts and consumer demand held up well.

More bearishly for bonds, the Federal Reserve's preferred measure of core inflation was revised up a tick to 1.4 per cent. That could add to the Fed's confidence that inflation would rise toward 2 per cent over time and thus support its central forecast of 100 basis points of interest rate hikes next year.

Many bond investors have been wagering inflation would stay more subdued and the data triggered a round of profit-taking in Treasuries, particularly in popular curve-flattening trades.

Yields on 10-year and 30-year Treasury paper both rose around 4 basis points.

Fixed-income assets have also been greatly aided by the long slide in oil prices so any hint of a steadying in crude tends to weigh on bonds.

US crude futures were quoted 30 cents higher at US$36.44 a barrel, while Brent gained 35 cents to US$36.46.

Both saw a slight boost after the American Petroleum Institute, an industry trade group, released data showing an unexpected drop in stockpiles.

In currency markets, the US dollar steadied after three sessions of losses with turnover very light.

The dollar was little moved on the yen at 121.00, having touched a one-week low overnight, while the euro eased a touch to US$1.0938.

Against a basket of currencies, the dollar was a slim 0.03 percent higher at 98.266.