Asia Stocks Rebound as U.S., Europe Futures Gain; Yen, Gold Fall

Asian shares rebounded from a three-year low, led by a surge in Japanese shares, amid speculation losses that pushed global equities into a bear market were excessive. U.S. and European stock futures rallied as China’s yuan jumped by the most since a dollar peg was scrapped in 2005.

The MSCI Asia Pacific Index was headed for its biggest gain since April 2009 and Japan’s Topix soared 8 percent.The Shanghai Composite Index declined as trading resumed after the week-long Lunar New Year holiday, while the yuan climbed to its strongest level of the year as China reported a record trade surplus.

U.S. crude slipped to about $29 a barrel, after a 12 percent surge on Friday that burnished investor sentiment. The yen retreated with gold as haven assets fell out of favor.An MSCI gauge of global equities capped a 20 percent slide from a May record last week as the Federal Reserve acknowledged the volatility around the world and signaled it may delay further monetary tightening.

China’s central bank stepped up efforts to restore stability to the nation’s currency and economy, with Governor Zhou Xiaochuan saying there’s no basis for continued yuan depreciation. After sinking for six straight days on glut concerns, crude futures jumped by the most in seven years on Friday as the Standard & Poor’s 500 Index rebounded on stronger-than-expected U.S. retail sales data.

An 11 percent drop in China’s exports in January was eclipsed by an even bigger tumble in imports, leaving a record $63.3 billion trade surplus for the world’s biggest trading nation, a report showed on Monday.

Japan announced a bigger-than-expected decline in fourth-quarter gross domestic product, spurring speculation the central bank will boost stimulus. Financial markets in the U.S. and Canada will be closed Monday for holidays.

Oil prices rise, U.S. crude shrugs off equity slump

Crude oil prices rose on Tuesday, with U.S. crude shrugging off big drops in Japan's stock market and eroding some of the previous session's losses that were driven by festering concerns about global oversupply.

U.S. crude CLc1 was up 33 cents at $30.02 a barrel at 0720 GMT, after rising as far as $30.30. The contract fell about 4 percent for the third day on Monday, finishing at $29.69.

Global benchmark Brent LCOc1 was up 6 cents at $32.94 a barrel. It settled the previous session down $1.18 at $33.88 in the day session of losses.

Prices on Monday were hit by a drop in U.S. equity markets amid persistent fears about the global economic slowdown. [MKTS/GLOB]

But on Tuesday, oil market traders ignored a more than 5 percent drop in Japan's Nikkei .N225. Many Asian markets are closed for Lunar New Year holidays.

"Once again we have got a weaker U.S. dollar and I suspect that's where the bulk of the support is coming from," said Michael McCarthy, chief market strategist, CMC Markets in Sydney.

The U.S. dollar fell against the Japanese yen JPY= as sentiment towards most risk assets turned bearish amid concerns about banking stability.

A declining dollar makes oil less expensive for holders of other currencies because most trade is denominated in the greenback, potentially spurring demand and lifting prices.

Still, the glut in world oil markets is unlikely to abate soon, with a Reuters survey showing U.S. crude stocks likely rose by 3.9 million barrels in the week ended on Feb. 5.

That dims prospects of any initiative on curbing supply to boost prices, including from producers such as Russia, analysts say.

"Hopes of a coordinated supply cut from OPEC and non-OPEC members continue to fade," ANZ said in a research note on Tuesday.