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Asia stocks rise on yen weakness, tech share gains

Sydney - Asian stocks advanced as technology shares continued a rebound and hawkish comments from a Federal Reserve official allayed concern about the strength of the world’s largest economy.

The dollar held gains as the yen weakened.

Japanese shares climbed to the highest since August 2015. Samsung Electronics led tech shares for a second day, after the Nasdaq 100 Index jumped the most since November.

Hong Kong equities erased an earlier advance ahead of MSCI’s decision on whether to include China’s domestic equities in benchmark indexes.

Treasuries fell on Monday after Fed Bank of New York President William Dudley said halting the tightening cycle now would imperil the economy.

"We’ve seen some unimpressive economic data recently, but Dudley appears unperturbed by them, providing relief for market participants," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities in Tokyo.

Dudley aligned himself with Chair Janet Yellen in declaring his expectation that a tight labour market will eventually trigger a rebound in inflation data that has been unexpectedly weak in recent months.

His comments were followed by remarks from Chicago Fed President Charles Evans, who said "the current environment supports very gradual rate hikes and slow preset reductions in our balance sheet."

Fed officials last week raised their benchmark interest rate for the third time in six months and pushed ahead on plans to begin reducing the central bank’s $4.5trn balance sheet later this year, despite growing concerns over stalling inflation.

Here are some of the key upcoming events:

Vice-Chair Stanley Fischer speaks Tuesday, with Fed officials making making appearances throughout the week. Still to come: Eric Rosengren, Robert Kaplan, Jerome Powell, James Bullard and Loretta Mester. MSCI announces whether it approved Chinese-listed stocks in its global benchmarks.

The $6.8trn onshore market is the world’s second largest and accounts for 9% of global stock value, but has been rejected for index inclusion three times by MSCI over issues including capital controls and long trading halts.

MSCI’s decision is expected on Tuesday after the close of US markets.

Here are the main moves in markets:

Stocks

Japan’s Topix rose 1% as of 1:11 in Tokyo, gaining for a third day to the highest since August 2015. Australia’s S&P/ASX 200 Index slipped 0.4%. The country’s largest banks retreated following ratings downgrades from Moody’s Investors Service.

South Korea’s Kospi was little changed. Samsung rose 2.8%, heading toward the biggest two-day increase since October. Hong Kong’s Hang Seng Index fell 0.1%, reversing an earlier gain of 0.5%, and the Shanghai Composite Index edged up less than 0.1%.

Futures on the S&P 500 Index increased 0.1%. The underlying gauge rose 0.8% on Monday as tech and health-care shares climbed. The Stoxx Europe 600 Index rose 0.9%.  

Currencies

The yen slid 0.1% to 111.68 per dollar. The South Korean won dropped 0.4%, and the Australian dollar lost less than 0.1%. The Bloomberg Dollar Spot Index was flat after advancing 0.4% on Monday.

The measure has been climbing after touching the lowest level since October last week.

Bonds

The yield on 10-year Treasuries was little changed at 2.19%, after rising four basis points Monday. Australian 10-year yields increased two basis points to 2.42%.  

Commodities

Oil was little changed at $44.22 a barrel, after settling at the lowest level since November on Monday.

Crude has fallen for four weeks straight as US drillers continue to add rigs, blunting Opec-led efforts to rebalance an oversupplied market.  

Gold rose 0.1% to $1 245.19 an ounce, after closing on Monday at the lowest in more than a month.

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