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Asia stocks get much-needed respite on crude prices bounce

Battered crude oil prices bounced back from their lows on Thursday, propelling solid gains in Asian shares and the dollar.

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Battered crude oil prices bounced back from their lows on Thursday, propelling solid gains in Asian shares and the dollar.

Thursday's gains built on Wall Street's consolidation overnight in which major indexes finished with declines of more than 1%, but well off the 3% plus they plumbed in the previous session when US crude had dropped to 2003 lows.

New front-month US March oil futures fell nearly 4% on the day to close at $28.35 a barrel, but they were up 1.2% in Asian trade at $28.70, a far cry from the expiring contract on US crude for February delivery, which slid 6.7% to settle at $26.55.

Brent crude rose 1.4% to $28.27 in Asian trade.

MSCI's broadest index of Asia-Pacific shares outside Japan extended early gains and was up 1.4% while Japan's Nikkei average added 1.5%, clawing back some of the 3.7% it plunged in the previous session to a 14-1/2 month closing low.

"Perhaps this stock market rebound comes from the usual suspects: Short-covering and bargain-hunting. However, today's results alone should not be seen as proof of an upward trend," said Hiroki Allen, chief representative of Superfund Securities Japan.

China's bluechip CSI300 index was down 0.5% in early trade, and the Shanghai Composite Index slipped 0.8%.

The dollar bounced back from a one-year low against its perceived safe-haven Japanese counterpart. The greenback added about 0.4% to 117.38 yen after falling as low as 115.97 on Wednesday, even as it marked impressive gains against some emerging market currencies.

"It is not your ordinary day in the foreign exchange market when the Russian rouble and the Mexican peso hit record lows while the Hong Kong dollar falls to its weakest level since 1999," said Kathy Lien, managing director at BK Asset Management in New York.

"Emerging market countries bear the brunt of the selling because the slowdown in global growth and volatility in commodities causes significant economic damage for these countries," she said in a note to clients.

US data out on Wednesday undermined the dollar overnight. US consumer prices unexpectedly fell in December, suggesting inflation was more sluggish than the US Federal Reserve believed.

Other Wednesday data showed a drop in housing starts and building permits last month, which led investors to pare expectations of further interest rate hikes this year.

The euro edged down about 0.2% to $1.0870, ahead of the European Central Bank's regular policy meeting later in the session.

Expectations are for the ECB to hold interest rates steady but highlight increasing risks to growth and inflation while keeping the door open for further easing steps later this year.

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