Asian markets follow Wall St to extend rally

Hong Kong - Asian stock markets rallied for a second straight session on Thursday, tracking gains in New York where traders cheered surprisingly upbeat earnings from Wall Street titan JPMorgan Chase.

The renewed confidence saw investors shift out of the safe investment yen, which in turn helped Japan's Nikkei chalk up another strong performance.

Analysts said a shock decision by Singapore to loosen monetary policy had also provided a lift to sentiment and sent the island state's currency tumbling.

After Wednesday's rally fuelled by rising oil prices and strong Chinese trade data, regional investors returned to trading floors to news that JP Morgan had posted forecast-beating first-quarter earnings.

The banking giant also said the US economy, the world's biggest, was on a solid footing and dismissed the prospects it would go into recession this year. The news provided strong support for the financial sector, with all three main New York indexes ending more than one percent higher.

"The fact that investor appetite for the heavily weighted banking sector looks to be returning could help see an even stronger day," Angus Nicholson, a markets analyst in Melbourne at IG, told clients.

In early trade Hong Kong was up 0.8%, Shanghai added 0.4%, Sydney climbed 0.7% and Seoul shot up more than 1.1%.

But Tokyo led the gains, with the Nikkei up 2.5% by the break. Japanese exporters were the big beneficiaries of another drop in the yen against the dollar.

The greenback bought ¥109.44, against ¥109.33 in New York. The US unit is also well up from the levels below ¥108 seen earlier in the week when worries about the state of the global economy sent investors racing to safety.

Singapore's dollar sank 0.8% - the most in five months - after the Monetary Authority of Singapore eased monetary policy as it looks to shore up the economy.

Nader Naeimi, head of dynamic markets at AMP Capital Investors said the move has given traders some hope that central banks will continue to unveil measures to kick-start growth.

"Central banks will continue to ease policy," he told Bloomberg News. "The weakness that we've seen in the US dollar and the fact that the Fed is going slowly now is allowing other countries to come out and ease.

That is what we need."