Tokyo: Asian shares rose on Friday, buoyed by upbeat data on US manufacturing and jobless claims that strengthened hopes for a sustainable economic recovery.
But trade was light, with many investors in the region as well as in Europe and the United States away for the Good Friday holiday.
South Korean shares hit their highest level in about 21 months, with Hyundai Motor and Samsung Electronics surging to record highs on strong foreign buying.
Japan’s Nikkei average hit an 18-month peak for the fourth straight day, getting a boost from a rise in tech shares and automakers such as Honda Motor and Toyota Motor following a jump in US auto sales in March.
Shares of Japanese exporters drew additional support from the yen’s fall this week to a seven-month low against the dollar. “There are some short-term signs of overheating... But at the same time, the market has been gaining energy,” said Hiroichi Nishi, general manager in the equity division of Nikko Cordial Securities, referring to a recent pick-up in trading volume on the Tokyo bourse.
“The global economy is recovering, and there are also strengthening hopes over corporate earnings,” he added.
An index of US manufacturing activity in March rose to ts highest level in over 5-years, the Institute for Supply Management said on Thursday, while a US Labor Department report showed initial weekly claims for jobless benefits fell more than expected.
The yen has been hurt by market expectations that the Bank of Japan, which has kept interest rates at 0.1%, will hold off on raising interest rates for the next year or two in a bid to spur economic growth.
By contrast, US primary dealers see a better than even chance of the Federal Reserve raising interest rates late in 2010, a factor that has helped support the dollar this year.
The dollar dipped 0.1% to ¥93.78 having hit a seven-month high of ¥94.05 marked on trading platform EBS on Thursday.
Weighing on the yen was talk that Japanese investors may move funds into higher-yielding currencies abroad for returns now that the new fiscal year has started.
“A recovery in the investment environment, given strong stocks and commodity prices and overall stability in financial markets, helps expectations for Japanese investors to show appetite for overseas assets,” said Kazuyuki Kato, treasury department manager at Mizuho Trust & Banking.
The euro dipped 0.1% against the dollar to $1.3579 and held steady against the Swiss franc at 1.4326 francs.
On Thursday, the euro posted its biggest one-day rise against the franc in nine months amid talk of intervention by the Swiss National Bank. The Swiss central bank declined to comment on the franc’s price action.
Trade was cautious, however, ahead of the release of US data later on Friday which is expected to show nonfarm payrolls grew for only the second time since the economy fell into recession in late 2007.
A good payroll number would bolster hopes that the world’s largest economy has now recovered enough to grow on its own without massive government support.
The Nikkei ended morning trade up 0.5%. It earlier hit a fresh 18-month intraday high and briefly rose to 11,313.98, just above a 38.2% retracement of a sell-off from its 2007 peak to its 2008 trough.
Honda and Toyota each rose more than 1% on news that US auto sales jumped to a seve-month high last month.
The MSCI’s broad measure of shares in the Asia-Pacific excluding Japan rose 0.2% and hit its highest level in nearly three months at one point.
South Korea’s KOSPI touched a high of 1,725.39, its loftiest level since late June 2008, as Hyundai Motor jumped 5 percent and Samsung Electronics rose 1.4% The index later pared its gains to 0.2%.
Japanese government bonds dipped as investors took profits following the previous day’s rally.
June 10-year JGB futures dipped 0.09 point to 138.60 after posting their biggest one-day gain in four months the previous day, when JGB investors began Japan’s new financial year by scooping up debt.
Ten-year US Treasuries rose around 3/32 in price to yield 3.868% down about a basis point from late US trade on Thursday and staying below a nine-month high of 3.92% hit last week.
US stock markets will be closed on Friday, and the Securities Industry and Financial Markets Association is recommending an early Treasuries market close at 7:30pm.