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Singapore - Asian stocks rose on Monday to their highest in more than two years in response to optimism on the US economy, while the dollar dipped to five-month lows against the euro.
Markets climbed broadly, but analysts said that data showing increased US business spending, which prompted a rise on Wall Street last Friday, were far from unequivocal.
Suggestions that the Federal Reserve might further resort to quantitative easing to stimulate the economy kept the dollar in check. It lost ground throughout the region.
The index of Asian stocks ex-Japan climbed 1.05%, hitting its highest point since June 2008. In Tokyo, the benchmark Nikkei rose 1.4%, buoyed by exporters after the Wall Street jump, but traders said gains were capped by the yen's enduring strength.
Shares of consumer lenders plunged after media said struggling Takefuji Corp was preparing for bankruptcy protection. Analysts discounted fears that this would seriously affect the Nikkei but also said any rises would also be limited.
"Wall Street's rise has provided a bit of a boost but gains on the US data are mainly because the figures weren't quite as bad as expected, not that they were really good," said Takashi Ushio, head of the investment strategy division at Marusan Securities. "So gains on this alone will be limited."
Seoul shares also posted gains, though these were mitigated by pressure on Hyundai Motor, South Korea's top carmaker, which announced it was recalling some 139 500 Sonata sedans sold in the United States. Hyundai declined 2.17%.
Rise in business spending
Economic reports on US durable goods orders and home sales were mixed on Friday, but traders focused on a rise in business spending in August as the latest sign of a firmer recovery.
Wall Street gained almost 2%, putting US stocks on course for four weeks of gains.
But subdued home sales and signs that manufacturing growth was slowing reinforced the view that the Fed may provide more monetary support to help the economy.
On Monday, the dollar was subject to further pressure.
It hovered near five-month lows to the euro and eight-month lows against a basket of currencies, pausing after steep losses last week and keeping the euro from pushing to new highs against $1.3500.
The dollar, quoted at ¥84.24 at 04:30, was hurt on Friday by stronger-than-expected data in Europe and expectations of further easing by the Federal Reserve.
One trader at a Japanese bank said dollar/yen would be caught between caution over another intervention by Japanese authorities and possible dollar selling by Japanese exporters ahead of the end of the first half of Japan's fiscal year.
"But even if stops near ¥84.00 yen are hit, I don't think we're in a market where the dollar will keep falling rapidly," he said. "It's scary to sell the downside."
